WSTG - Earnings call transcript Q1 2020 | Climb Global Solutions, Inc.

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Wayside Technology Group's Financial Results for the First Quarter ended March 31, 2020.

Joining us today are Wayside's CEO; Mr. Dale Foster; the company's CFO Mr. Michael Vesey; and the company's Vice President of Alliances for Lifeboat Distribution, Charles Bass.

By now everyone should have access to the first quarter 2020 earnings release which went out this afternoon at approximately 04:05 p.m. Time. Eastern available at Relations waysidetechnology.com. is Technology of the website Group's in release section Investor Wayside The This replay website. on is the call also company's available for webcast

Following your call open management for remarks we'll questions. the

I'd of like I comments in XXXX. Private forward-looking conference this Securities Mr. considered Before and are under to made webcast introduce call statements listeners that remind Litigation certain Foster, the Reform Act results subject and that statements are statements. to differ actual uncertainties could well forward-looking and forward-looking risks certain those These unknown from assumptions as as cause these reflected to materially known in

and are coronavirus generally SEC. and related are markets. the the in or adverse potential These novel also forward-looking the to uncertainties to global company company's economy and the other Currently that the statements pandemic the from time uncertainties time of of subject the risks effect COVID-XX to company with risks current financial the is filings on described to subject

will highly pandemic the The on containment including extent to to depend and measures of with severity and be the indirect or which uncertain the effects developments scope, confidence economic actions pandemic others. its and mitigate future predicted which contain the and the taken COVID-XX duration impact cannot impacts the direct pandemic, of company the among are and

no this any not place except forward-looking undertakes required revise call, to of as as on to company undue the any reliance of forward-looking law, or Do of statements. date to the any obligation results only statements which publicly speak by revision release the

of of directly SEC to been and rules. with as net measures non-GAAP financial adjusted non-GAAP our income expenses; accordance measures business. measures separation comparable reconciled This including performance presentation All measures in adjusted EBITDA; non-GAAP share most also earnings supplemental per the GAAP billings; includes including certain have gross

You'll furnished information the release charts X-K other and Form afternoon. to in this find important earnings and the SEC reconciliation

Dale Wayside's turn call I over to would now Foster. to CEO, the like

Dale Foster

good you afternoon Thank everyone. and Phyllis

of I updates customers of challenges team want in especially are operational many people the during communities into get COVID-XX. our our and that to unprecedented result time. this the proud to we serving Before the acknowledge I'm a dedication as their our facing

strong the to throughout EBITDA $X.X XXXX. Despite profit growth adjusted is million. in generated as to year last We the continue we and into we nearly carrying drove execute QX momentum well growth challenging double-digit environment, gross in XX%

The made we them current access that products sales will last using the have or partner to their remote investments address corporate the for technology and security that mandates companies security us many home data to and customer allow systems demand of allowed their year our to where are centers. amid marketing state of of the --

relationships have to a successful customer Our as vendor keep a tells in organization. sales-driven us these conditions built expanding ability market network foundation current that even our we resilient and deepen and

We spent and the employees. support March our second resources of health the safety half gearing to our of

mitigate to-date, any diligently to our down All has to costs are business potential been working our road. Though impacts are negatively remotely. of teams continuing operating and our impacted COVID-XX by manage now corporate we not the structure

proud quarter. second in into momentum our at full strength place, to we are continue and these priorities With capacity we the be as operating

is this April. we announced the our year which April with of business the I of most XXth Technologies our Interwork of on share that acquisition closed significant and One can to officially updates you of subsequent on QX XX

will very synergies and the and identify costs term. value-added in Interwork solutions management the have Toronto-based short near-term on specialty and a similar U.S.. Lifeboat both on multiple the network cybersecurity, in high-touch is servicing clients Interwork approach two built a revenue cultures Canada focused with between and information differentiated distributor and we organizations

our to some that strategy shortly. benefits the vendor and Charles of brings Interwork will alliance discuss network

to forward look greatly Lifeboat we that network. say platform distribution with further getting Interwork integrated our Distribution expand our to I'll to now For

state Before vendor through provide I'd and like From QX Wayside's there Mike marketing and the walk back over highlights. we business to – trajectory, technology closing more pass will to post the of remarks. to financials our will detail us will recent come and Charles on in and for discuss I I the call

that, With Charles?

Charles Bass

Thanks, Dale.

Canada strategy, us and our the onboarding of vendor reputation resellers responsive our on leverage for on value-added highly emerging current to of high of with Interwork a as vendor levels particularly VARs in lot Canada. company's presence the The opportunity we On in focuses brings deep alliance tech new potential presents which relationships Interwork's and network own more XX a topic VARs. a network of execute acquisition and than service provide Interwork evaluating or us great partners identifying vast for partners. expand

Given our expect organizations. customers services in we partners, technology products limited actively cross-sell overlap and both across to and

one ability value in of Acronis acquisition. grow strongly to capacity and Lifeboat's and overlapping network with to products. and see They Interwork for welcome significant along value integrate into fact, Lifeboat platform. Acronis' combination the remain In the to from of our three vendor enthusiastic feedback the committed as we endorsed distribution go-to-market Interwork's to its Acronis only We we accelerate partners delivering all their new this our vendors

that see our mention benefits with to technology that, important I'd well emerging also we fit two strategy. like future

Lifeboat's got here critical business on had a second, interactions Interwork's very developed we've a which interworks vendor protection security – will talent of positive brands. category. And of we data Lifeboat Trend that across Micro is with mass one product partners. leverage They've and focused is very largest So and first, experience larger

top commit relationships than success them. our core our bolster committed our line Interwork We strategy with emerging even to to remain these focused Interwork's partners. the and with new strategy significant building deeper fast-track on of acquisition our while vendors to adding replicating brands interruption. vendor will card, significant In to our the Lifeboat rather of resources resources an is a current view, onboarding

to over financial the Michael call to details to With turn provide Mike? that, on our more I'd like results.

Michael Vesey

sales right Net quarter XX% results. Jumping period first $XX.X $XX.X increased good XXXX. million Thanks, same in our the compared into to million, for in afternoon, to the Charles, and everyone.

was billings this was attributable a increased change to a the volume, basis. growth, of over Just of mix gross result on a record gross sales adjusted we in while rest products in half

Lifeboat million. to XX% sales million million increased increased XX% to to for $XX.X $X.X in same quarter segment the first million Distribution to million $XXX.X last compared the million $XX.X segment net the non-GAAP increased first $X.X TechXtend a compared year. to XX% sales billings compared quarter net $XXX.X to measure Adjusted in gross and period

revenue was profit, in increased gross appropriate With stated most treatments past, $X.X As to growth given gauge our industry. said, accounting in in the to XX% the unique we first and The vendor XXXX. Lifeboat to metric compared our profit for the that drive to customer have expand business is the gross Distribution, $X.X network million quarter growth. from our benefited deepen segment driven period primary our same our to by million relationships continued which in increase work

consistent Total SG&A expenses the quarter. the ago first million year at remained $X.X in quarter same with

in without vendor continue As decreased the XXX recruitment, points our of to our which a revenue, growth sales a we scalability and demonstrating in business percentage X.X% basis as SG&A SG&A. XX.X% our field leverage compared QX of increase investments to in enables proportionate to XXXX

The share share or in to or in was settlement of as costs decrease quarter income per $X.X the with first same costs per Dale Interwork XXXX these related diluted the as $X.X in the our period by income per $X.XX these was N&W well XXXX. diluted costs related share. acquisition. $XXX,XXX $X.XX will was net which which to QX compared million Group, onetime Net highlight excludes shortly driven million Adjusted to $X.XX or – in costs

percentage is increased was defined XXXX. increase increased driven Adjusted efficiencies. gross reflect EBITDA the the operating continues our by million our strong to adjusted profit and to adjusted as year EBITDA points leverage of to with for prior a we operating in $X.X prudent to the which XX% the for which compared organic business. Effective cost XX.X% partners existing first new growth compared EBITDA $X.X basis management million XX.X% period in created in same additions XXX quarter period, coupled as margin, and vendor in The with to

Cash debt-free the and at XX, and our timing in XXXX of of availability decrease under at cash compared December equivalents to to is XXXX receivables. remain million The end XX, XXXX of cash from $XX.X $XX million facility. March were with the we credit $XX million attributable

makes unprecedented committed to lines of communication helping conditions. relationships these flexibility are customer our much them more to our therefore strengthens resilient our mitigate about customers the of several pandemic impacts our of in flexibility we terms as and on regarding As us and partners difficult Maintaining their business that business, view with time. market resellers this the and open have only our these timing and communicated receivables. We payment in them adjust

May We a portion of Board On common to shareholders May share continue on form XX, in $X.XX the to stock dividend return of a our quarterly X, XXXX, earnings of to XXXX. Directors record May XX, payable of significant of per the shareholders of XXXX declared a dividend.

X million Interwork We've Now opportunity that of adjusted an closed of US$XXX,XXX U.S. the X.X accelerate and a month. CAD end dollars earn-out. price of Interwork post-closing closing at equates plus this to We to payable earn-out. our purchase closing on the gross CAD acquisition as a the both acquired to from million US$X.X million potential aggregate this at In for profit on Technologies plus details transaction growth view EBITDA. of great in

acquisition the adjusted phased expect during the million annualized synergies approximately in to and add that third EBITDA second after We will in US$X be realizing quarter.

opportunities growth. fits our picking put within that effectively, strategic we've asset use to importantly, provides future strategy up for capital our operating More and a

prepared to my concludes remarks. back Dale. the call This I'll turn over

Dale Foster

Mike. you, Thank

I'd & Before provide plans the group. we for first with recent I on get took road the that actions ahead the North to the details into Webster like

before, communicated Wayside of mentioned serve which stockholders in to shareholders, received N&W annual year, with N&W as QX director This XXXX call. conference last their As solicitation nominate solicitation we for settlement election not from our the April did unsolicited proposal at reached to further interest December we we've regarding proxy followed a best our we of meeting. determined on an acquire our on candidates XX,

the solicitation shares of and lawsuit N&W group notably, director dismiss their proxy any agreed agreed to cease activity of withdraw last we $XX.XX also X.X% share. at a and to price to the common to Most N&W. will of our our notice their us against the from further outstanding per – candidates nominate settlement allowed In settlement intent repurchase month solicitation

drive that will times, in our carry newer to strong will throughout to and beyond, verticals QX continue challenging to Even Looking and we Distribution these presence our a core we momentum the verticals from we like business. product growth perspective, expect connectivity. year cloud through delivering our deepen continue in in sustainable growth profitable our while Lifeboat and

and profit through gross maintaining Across our are generating of to portion EBITDA. growth double-digit our significant organic in expect that we to adjusted on we flow business, focus growth a

Integrating platform and Interwork into the even advance will Lifeboat allow continuing make and organization. goal progress Distribution's coming this quarters our stronger us further in as towards sales-driven a momentum us to the

company the soon. the of In strength the to in brands addition, more evaluating we technology two companies with disruptors. shared rebrand process have a details to DNA are on We emerging better reflect comprehensive and our plan initiative for of the and this

continue environment diligently about will to on long-term our and may remain we the aside, That pandemic the cautious broader impacts this in economy. have that operate

quarters in believe us positioned all ahead. information partners continue we of executing environment latest our in the With and available and supporting committed we are are to to we today, the to well months this

operator With that up for to the questions. I'll open

Operator

you, Capital. sir. with first Ed And will Woo Thank question from Ascendiant Instructions] come [Operator our

Ed Woo

the for bit you little I could and versus Thank played was the of more changes you trends on January congratulations out. February? quarter. and in a how Do taking quarterly if questions color give you just any see Yes. on my us wondering March

Dale Foster

actually of the of strong think that a and always Dale. I we or products look transacting end had dollar we're is during lot and quarter lot going up up the the people quarter into taking quarter we has are but taking to what we side. that the But in sales a built sell. do we with of the this at Ed, course, it month-by-month saw the We

But surrounding center everybody of going security everybody that. was bringing to those way like A it board. that's the lot products selling the into everything and the hardware back virtual data game all on remote. was We don't desktops, and related of get laptops things

strong. the middle that though end-user it channel, the at demand in quarter that even we're was of time So the finished

Ed Woo

that if terms or Great. need to And feel then, obviously, congratulations acquisition. potential in on believe do How current acquisition, right that you capacity of recent M&As? you something the the some have feel to the integrate Do opportunity you guys you soon? guys do time your do you you find

Dale Foster

four XX in company the years that and company has have the different five people last come in areas first years. done we a as from Yeah. -- over or one company It's the the

So why are personalities to we fit well they and great They're believe we're very for the have, as And we team. easier can for continue us, great similar of a just Interwork. similar the and technology it's wasn't to space, backgrounds for lot if to that a us it's the culture our going integrating a in it look us. some make it

teams the get already process. that our stop starting done to but try finalized, until already actually have and And teams -- you – been have things them talking

our of as close. of to but So we we'll look well, integrated get that yeah continue we'll cultures if quickly -- good are a because that this pretty and mix just find

Ed Woo

my good I answering you. and for Thank questions, you guys thank luck. Well, wish continued you Great.

Operator

the Investor. [ph], Peter question next comes Our Private from Lucks line of

Unidentified Analyst

Good quarter. guys. Hi,

So you it will of -- we're in the is there anything given suite potentially that products that the working -- background sell questions, of in a the environment environment specific given and would products use that couple the is be particularly that people's working in? on that the of based products thing concentrate might we're on of more enhance because current these people COVID

Dale Foster

you start want I that do add? and can with you Charles, or can to

Charles Bass

sure. Yeah

success most a when look that the some the the the see security like. what carry and are you be would a the and space do and there's fairly current in rush So home say most that to capable. users universal the probably success in side. have is companies the to the partners it's that to a security where -- I to from overall way that products maybe small We is in our most COVID where see the remote from be and But impact benefited protect we that end we future rush fairly going where at we candidly success the finding economy Peter future-looking assets

in today. that think call we're we because that that the think last So we there environment will that a brands future excellent in about of feel talked have we of upside, couple the is earnings Security Scorecard actually we like

Dale Foster

And it's allows it agree run the VDI about then do add that I Charles on virtual to with coordinate or ago as that, with side. these sole to the virtual started years just real a six security remotely desktop referred there's to to desktops. and seven people

they you four about So vendors a to focus we They DataCore name hyperconverged out them like see putting have space, Tintri and into and products the couple get the just have that in but do. can to energy they're that's a market. what their

data operational as as in thinking sitting got customers, advantage XXX% this their all everybody's they take stuff they the homes that back and we'll way the close to centers. will of and need start to because the so people So that with got to have to efficiency do they can as well in

Unidentified Analyst

Right.

vendors any added guys you have you're that new said, in that particularly quarter excited riders with about? the So or potential

Charles Bass

I'm far is the tried excited Charles I joking to had will year quarter. again. ago. more we about we we a in we were -- aside, all hi, perhaps vendors did that have selective the Peter, say this than be

And the of a As hardware with think success vendors, couple here a are be us. lot with architecture are we from that which to it allocating But that a impactful days like XX year a platform. we've in picked last going been vendors had out Liqid, we composable now. to companies there's of up is that we're even winning brands are those assets

of that days. tremendous We we have a just inked the they XX the upside in in within differentiation market. And contract amount here see

on of we're Lifeboat new is the one least key -- that Liqid the moving a we'll say And just fairly process the be would actually the beginning that's from ones that excitement on-boarding candidly I brands of lot side we're on. So at on some Interwork. over security of

Unidentified Analyst

So Mike, for had you. question a I

capitalization reducing X.X%. market math straight the apply you would stock Just in the of or by

And EBITDA quarter both gross that in on just So might a then directly? we net perhaps you had, increase and apply see see based you so profit? that the X% would would you

Michael Vesey

Well yes.

X.X%. definitely happened share transaction by outstanding -- So the will April. share count The in the the change

Unidentified Analyst

Right.

Michael Vesey

average X.X accretive when year-to-date there'll look for that same year with at weighted to EPS be the count the So, old the new a it rest year. QX the and the you're results, results impact months you count the of for and will it be be looking the sure at of will when our to thing with the but share remainder share

Unidentified Analyst

a And just just is thing one of sort other comment.

boys it it of breathing be trying year months because during talked communicate that transparent your with the more really that of see about perhaps first N&W -- Unfortunately, N&W quarter the on way the your shareholders -- shareholders. half of first over news particularly last neck, be to was the we to to your that your things One more I the your on more of the and was with to comes back year that to is didn't the was but frequently? conversant with couple intent

Dale Foster

Yes.

I I want do we and mean think to be Peter transparent. that more

I of the was talk stuff -- were think couldn't just and going not there that we about of legally. they're there moving just some scenes couldn't that a we fast put behind lot we out stuff the because

Unidentified Analyst

it keep up Thanks. Listen, luck. good and quarter good and

Michael Vesey

Thanks Peter.

Operator

Your Investor. Private of comes from next the question line Jacobs, Justin

Unidentified Analyst

quarter taking and guys. Congratulations you the on Hey question. strong appreciate another

further? any bad release look in your you've in briefly remarks, the are And on meaning Just just that on May, beginning seeing you commented in debts? prepared or a digging timing stretching seen of as clarification have the increase the so earlier and accounts of today, the kind in receivables of receivable you you then

Michael Vesey

Yes.

because our a with receivables pay, in in terms different a on bad Increasing help give a them wanted get we'll reseller little really they glove haven't take them deal. the If And ability terms. degraded a get have of know with -- couple I way. and in them there's ways. We in work was hand of any to and no. resellers Justin, the to terms familiar bit we're of to debts overall, extended order situations to where in it's the with had receivables us work Mike. our a And

had out the resellers to at couple reel large of in of quarter we the had in So, a to end current deals the that order environment. help we the them given

Unidentified Analyst

it. Got

Okay sorry. go so -- a ahead I'm just

Dale Foster

a I'll real quick. Yes add

users. these into information because is have do so we're available. end products We so a We're a the they -- have actually We they're insight distributor have they deal our selling to insight reg them, registrations tied to lot resellers. of

are a more end at at harder also in reseller taking asking a the we closer So industries the users. look they're and questions taking what maybe and look

continue we'll that So in lower-margin do it's because to important very gain. a

Unidentified Analyst

Okay.

of end confirm you to the just material seeing as you haven't through you saw the month look So so little today what the quarter? to though versus quarter, end seen the in any as per you beyond not of look change you're

Dale Foster

we No, not. are

Unidentified Analyst

guys. Perfect. much up Great. great work. Keep very the you Thank

Michael Vesey

Thank you.

Dale Foster

you. Thank it. Appreciate

Operator

Instructions] Sterling next comes question Peters Your Zenith [Operator of from with the line Advisers. Josh

Josh Peters

Really Hello, as congratulations add my to good afternoon gentlemen. want well.

in dealing I environment would truly exceptional be your it with is execution what to and an something see. think now we're ordinary even

question do and have cash reserves. flow just a I cash about

$X.X $X.X another ended those Interwork. to shares of we cash. the quarter about $XX.X then like repurchased million with Since looked million So, that about you about million purchase

about equal else being all that $X.X you brings million. So to down

of unfolds, additional the As revolver finance supplies to yourself using see growth? do your or you your in year order capital seeking

Dale Foster

some receivables timing of payables that. more before Just of detail that's but give will on you the and about just Mike

our I it's it, but So if there tap use we that into -- need of but have affected revolver rarely we don't it we if that. some to

Michael Vesey

yes. Yes,

we I the to date could the Interwork of stock our our So, is think view that fund existing acquisition reserves. and buyback that did out we cash

availability. We revolver have for the

have we through. do We cash cycle that an go intra-quarter

a and into to our have working large in revolver deal we flows So new manage ebbs quarter time-to-time through. capital, if use -- perhaps come particularly the we from

a But that to where would we put have position debt. us think permanent in anything we don't done date we've

liquidity have So, we other and looking think of still to other prudently. review uses our deals capital forward we

Josh Peters

very you Thank again, and Okay. congratulations. much

Michael Vesey

Thank you, Josh.

Dale Foster

Thank you.

Operator

call time, concludes like to to Foster over this Mr. turn remarks. session. this At would our for now the back question-and-answer closing I

Dale Foster

and to today's everybody I'd we end And we'll track Thank I we and QX call. watch QX Great. when report talk talk everybody to Thanks. stay at through results. you thank and as attended appreciate us keeping to Phyllis. progress safe. the please you, like do of our support about your QX that next us continue of

Operator

conclude conference. Ladies and today's this gentlemen, does

Thank for your disconnect may at this You your participation. time. lines you now

Climb Global Solutions (CLMB) 12 May 202020 Q1 Earnings call transcript