WSTG - Earnings call transcript Q4 2020 | Climb Global Solutions, Inc.

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Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss Wayside Technology Group's Financial Results for the Fourth Quarter and Full Year Ended December 31, 2020.

Joining us today are Wayside CEO, Mr. Dale Foster; and company's CFO, Mr. Michael Vesey; and the company's outside Investor Relations Advisor, Sean Mansouri with Gateway Investor Relations. And by now, everyone should have an access to the fourth quarter of the full-year of 2020 earnings release, which went out yesterday afternoon at approximately 4:15 pm Eastern time. in website Relations at available Wayside of is Group Technology waysidetechnology.com. release the section Investor the The This call is the company's also available for webcast website. replay at

questions. to Following would some to introductory remarks, we'll you. the for for management Thank open Mr. Mansouri, now the turn your like comments. call over call I

Sean Mansouri

you. Thank

to forward-looking the to are of known that uncertainties, Before call cause materially statements considered certain are statements forward-looking as well and that Except not also only which to with other undertakes from time like of these actual as that company's Private Litigation comments uncertainties the differ any Act and any are as this remind under Reform Do and to the forward-looking SEC. risks on law, revision Securities I described publicly These introduce Dale, statements, and time to reliance made obligation certain XXXX. unknown webcast statements. results revise risks are no forward-looking the the release listeners forward-looking filings of any in subject and to statements. reflected speaks undue the I'd or as by could subject required in place conference from These generally to date of forward-looking statements assumptions those this call. company results

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

X-K and to SEC to now the the yesterday. we Dale information You'll over and find important furnished and reconciliation the that CEO Dale? call earnings turn Foster. I'll released wayside charts Form other

Dale Foster

all during gross increased Billings, new and record-levels Both morning, focus our fourth the bottom pandemic ended sales We on thank adding and and lows metrics And our key the our and integrating delivering pandemic recover to maintained vendors strong additional customers we support second to very and been organically note if exceptional are good in profit or growth acquisitions net the through were CDF for Sean, employees acquisition Interwork. globe. the strategy. quarter. we back you, XXXX driving Gross from to from and from a would navigate not growth to across our top our vendors not and card, emerging synergies and quarter across contributing the our financial of Thank as line have everyone. the our of resilience executing you. our businesses in we line genuinely are on track the our the ability quarter, possible And and for

first identify The network. and teams' the and growth of our we'll key all into improving second, profit our growth initiatives: and to we and increased overall growth make broken our go-to two of depth cash can the cash three our utilize and our breadth margin. Our suite deepening above enhanced acquisitions products market be accretive XXXX flow in vendor and down from to by sheet free our expand strategy potential; completed vendor and card organic significantly acquisition, further acquisitions our new long term while with balance The approach. revenue average emerging vendor business diversifying adding line vendors relationships; by and our drive third, continue existing

job success. for an XXX of employees a from Climb Interwork doubled sales integrated, portfolio particularly with identifying engine branding. today, the with vendors of Interwork, number have markets. strategic valuable XXX knowing significant Canada our that well overlapping such unified our significant as U.S. As Trend is had with to previously partner single add team wins our able we're an their these nearly with a and result of a the vendors. relationships to now teams some also our our and Interwork expanded full based and We've are proud the across both building the excellent U.S. I'm accomplishment as of, fully Micro, acquisition Canada cross-selling acquisitions, we this Climb cloud under future Acronis both With and North a our a in to our We're vendor team executing deepened to we're largest in offering, in network Through doing opportunities of America resellers due in

CDF UK-based Amsterdam expansion legacy office President. our with Vice distribution European as to Our the integration is CDF well in underway and reports now

There continue to relationships forward. will We vendor salesforce. significant be CDF cross-selling acquisition, between and our Canada go EMEA with we savings fewer U.S. and overlapping cost the opportunities as and see providing consolidation

as each develop sales continue success. We and day we to team are of more united a and culture strong focused

enabling viable inherited we many we're the our over of our our leap IT strong marquee How's Know and partner position division a traditional of a advances By maintains of CDF acquisition. developed specialized and cloud provider. teams, Microsoft, Cloud represents CDF cloud others, notable us Leveraging another services standing relationships and a past now partners as years. our some adaption Europe, value-added Know strategic reseller team across important our experts, significant With service distribution XX credentials. migration function, the combining beyond such holds European vendors This making How, Intel and a services distribution Flexera, and certifications businesses, Quest Cloud provider further Climb element with of teams tools. the the developer with of operations and vendor presence CDF CDF, exclusive and cloud business acquisition distribution software's

expand real its overall Wayside operating Importantly, to this opportunity margin. offers profit for

our be can all customers internal of businesses day development technical to our Now which across by Climb customers. level, consulting provide our the helps product expedite On platform an of become subsidiary geographies. and support cloud services can indispensable and Channel CDF Solutions from ranging every and with [ph] CDF a the specialized CDF partner utilized

launch moving cloud are many to We and expect roll the April subscription-based cloud to marketplace to out vendors vendors onto a continue that in new we'll as model.

discussing our focus like a affected. software during which share high and occurred words XXXX emerging potential quarter. would Wayside's the onboarding cyber-attack technology few vendor that fourth to strategy, were SolarWinds directly the Before on vendors, about alliance I not operations identifying

organization version Our code. of compromised the using that not was contained the software

and profit. XXXX as Our we we full of sales less vendor technology SolarWinds products. relationship be partnership sure, gross some with was result XX% security for and publicized, with weakness since a have its a a than suite SolarWinds cyber-attack maintained solid accounted our experienced To emerging of

our continue with the safety work and supportive to vendors and to partner closely as offerings our preserve of security SolarWinds. will of as other We remain

only wins is very via brand, route interface from and a channels to engaging and to software distributing social is a with the now highlight WhatsApp, quarter. a include its market package while offer foster Zendesk's we distribution relationships relations offering, flexible software. management customer Zendesk Climb including Through began other me now messaging multiple unified email, seamlessly important can across customers November, media designed the expanding distributor. a our CRM and help In powerful apps. customer and voice, its Solutions Let successful WeChat, first as vendor offering well-known to Channel chat, and The customer communication scale. better updates few businesses companies service to

growth the be in to increased big a expect part of Zendesk's in channel XXXX. sales We

to and addition offerings our solutions we offering centers interfaces, In with product expanding core backend operations. from are frontend technology data cohesive

management their centers leading Linux allow We Kubernetes integrate system, Through a owned in data America. distributing all partners comprise platform core partner incremental and distributor edge innovative their pioneering I'd efficiently one capabilities of value our to to our delivering vendors best-in-class DDN. distribution is SUSE are throughout a products with a operating success base partner capabilities. like now we opensource with the opensource our now of of SUSE, market which we key in North highlight a Tintri, by to host which solutions operations. enjoyed expanded These unique solutions offer

investment and brand and enablement, a ago, We investments year personnel. agreed marketing both the substantial key in Over to on increase Climb sales. made Tintri mutual plan

Technology are sales and extremely our brand the as and strength business. I Officer, serves entire Chief areas we paying role a the our to vendor of Charles acknowledge a leadership, quarter quarter. efforts leadership the to for Tintri the just Group. team. Solutions year marketing I'm continued Climb The improve Charles record drive to five vendors of during to have and Channel as his alliance fourth pleased offering product investments would our in also December, global of evidenced added results have teams Marketing sales executive excellent quarter ended. growing Bass focus fourth been products awareness, and the a Wayside the with sales the the Our growth for Each diligently became work portfolio and while core promoted brand testament to bolster alliance enhances in our in results and focus Under and vendor and a In and created the fourth strategies. off brand incredible entire our year. team. and newly during top becoming like our

Michael Elevate was will processes Elevate new target future of just can market and an of new, to we efficient we they strengthen Climb growth for Elevate, new division our the that new year XX-year full our distribution by brands who a at for focuses veteran wholly owned partnership led with Climb. potential took extension be strategy market joins career strategy. will started We to aren't market brands. our CDW. ready a Solutions scale our Finally, next launched the initiative ship brands to This the position. us addressable at Bernstein, overall subsidiary Channel increase and last technology Climb exciting logical and Climb build strategic of a that to a upon as after our take full Climb and division on develop. and quite code breadth that called will industry organic in This emerging

auxiliary effort to of vendors. teams more it efficient new We a allocation with existing our and expect growing allow business our and and sales a be time

sheet simultaneously our margin We're started reflect year our throughout with had to I at more getting ever on first throughout to XXXX. proud have to the integrations, We committed objectives balance accelerating managed growth and made CEO shareholder strategic the grew the a provide our while all cash driving while As ahead. of forward the strategic I of Wayside, as progress remain our earnings advancing full and excellent we momentum we've I'm and look throughout topline than company. acquisitions the strong rationalizing We related just pandemic, two value. my year

dedicated reiterate solutions tech and supporting work and to our Climb Mike call CDF combined our our Vesey, what call to gratitude most our sales then vendor was extend arguably over Before your turning turn and all the the teams Channel for year Mike and the over Interwork, my use expanding want for I and most Vesey, financial of the to I'll CFO to challenging for recent network history. during the bar teams, results. in now

Michael Vesey

Dale, and morning, everyone. Thanks, good

off, in business. kick CDF, to to seasonal two everyone million XXXX to to million acquisitions like the within $XXX.X fourth include growth in non-GAAP sales profit Before fourth improvements. of expect year, quarter compared reflects Net Gross impact Interwork contribution, in XX% quarter. in net eight our the I'd quarter. year-ago of XXXX. operating quarter to strength With gross $X.X the remind and strong to strong XXXX network meaningful as year-ago the profitability Interwork, during compared well things million in the already SG&A months the November in growth to The aforementioned quarter fully increased existing sales two quarter. as fourth CDF the results as acquisition we million of of on quarter of well increased primarily of quarter compared was contribution of compared year from the our the in $X.X vendor measure The million of contributing financial increased $XX.X to approximately of our $XX.X this generated XXXX our to we which billings attributable the year-ago million $X.X quarter. increase XX% months closed X, and as this during period expenses that Adjusted our completed the quarter. fourth the to were acquisitions generating the XX% integrated continue ago results XXXX, to from

we was continue and associated acquired drive increase XX.X% businesses of in SG&A as The As costs a was percentage net of personnel sales, additive driven to the X.X% to growth. more compared sales increased primarily with CDF acquisition by the to transaction, related quarter. invest the the year-ago future expenses costs in

to the organizations. to to SG&A to diluted resources Net the compared year-ago cents quarter. cents As we quarter. $X.XX in cents businesses as XXX XX.X%, increased of CDF $X.XX share in at million, XX% we and basis XX, in and fourth to the We $XX share, non-recurring to quarter Effective $X.X combined $X.X costs Cash the diluted primarily Adjusted the $XX.X profit leverage from compared of million the the of margins well. of acquired share $X.XX to by XXXX, million in debt-free per year. income per XXXX, million $X the remain million which million improve the or XXXX, adjusted EBITDA excludes net adjusted unsolicited to XX% we points the EBITDA defined XX, Interwork bid, related driven gross quarter our per expect XX.X% as or or year-ago fourth increased share, The increased during resulting income, same and which per $X.X as at XXXX. cash the cents $X.XX year-ago we to December $X.X compared is acquisitions and gross $X increased or compared for million as In quarter the in grow, a to margin, million XX% impact growth the quarter. compared December the increase to percentage aforementioned of period equivalents was during XXXX. profit increased

CDF. on price, Even net quarter, one our capital which our from liquidity this of full quarter. relative fourth with to an reflects XX, during common early cents XXXX other after XXXX Board cash February for higher declared quarterly benefits a we of share Directors working of stock, the XXXX, to cash the $X.XX in balance XX, implemented resulting and XXXX. customers payout, second the per XX, adjustments of $XX.X paid record During the sustained program March end working improvements dividend payable of of large discount March of excludes paid purchase million the shareholders capital the on On

through we and remarks. our As execute on position with concludes acquisitive look prepared growth initiatives. provides strong my XXXX, ahead us organic flexibility This liquidity to our continued

up questions. open for Now, it we'll

Operator

from Thank you. [Operator [indiscernible], is the And Instructions] investor. line of our first question an

Your Thank line you. is now open.

Unidentified Analyst

Dale. Hi, me hear Can there?

Dale Foster

you I Howard. fine. hear Yes, Thanks,

Unidentified Analyst

Great.

stage financing what and and getting program' So, vendor. congrats to you setting with for and in AR two an 'crazy XXXX quarter the really entire with the those team on call acquisitions is My the your of really I outstanding rid question looking forward.

for then, see Wayside also longer two with Interwork Now see what gross footprint targets? now into billings. are you integrated at see crossed $X expanded stated your you've in you Europe, and IP what markets perspective guess, your and that some you've reasonable you CDF XX% market what and we you really market? emerging as got billion you've really these a that's really, there market distribution especially you've give are you based XXXX. I as and but addressable play in, do given that in Canada in this, XXXX two do your cloud total growth -- you growth? how technology and expanded solid system acquisitions your the don't term, give parts made guidance, looking know in us and growth? of I Just annualized XX% distribution And

Dale Foster

And kickoff growth, our growth. part and productivity just it's Not you're Yes, said very which we Howard. X% of XXX members, the thanks, as done see virtual, that out an where for right. I sales members thing well. And team team to far just everybody, is on. like we we came looking as focus the first we our XX% an got feel over we're our what XXXX, to at internal it imagine but can you like Expanding

do but teams, We that their our our that the have that compensation commission But actually not to sales in give own goal metrics trying we that's range. plans. set that, achieve, we the for growth we're that's where and

addressable a the it's at look as little difficult. far market, it two more As ways. We

look over make the let's way of are you because XX% billion out up -- just America, have big look at big and take that looking ones there, of a we So has overall four sales XX% sorry, and the their emerging North $XXX the on. the probably at being and [ph], that of distributors one that they I'm North if XX% the vendors, U.S. distis at these portfolio America emerging vendor each go they big

things in are like as billion, next billion. side billion, it's we're the $XXX at So, emerging net, they group $XX is of with one we where is that's the competing you said $X the say And didn't billion against. you if gap, and the look $XX

now a in American have at in so can emerging quick, too we as before Climb release, it's we right was market Solution. don't Channel even really expanding we then in them team. North play big this seamless so disruptive look it's but Interwork one we the gap combined that We because So, do about And Interwork -- talk to become we space. really the integration and so

We everyday same Interwork back teams the work Interwork and the into have side. of many our integrated thing so into going

in piece we addressable if XXX back So that look we one satellite just But group. a see next it's you have that and expansion as to where were it. real office now into we the and really the really our went of UK, and market where some Europe, we people at

so that $X market, and is huge, billion $XX addressable addressable just need we range the keep I probably number okay, more and big into. that in get can it's that to know research that billion can we So to saying go we

Unidentified Analyst

XX% that. would bottom percentage terms up with for be of target follow If you for growth, can Michael. have happy in do or in on quick could of your give what you Great. add and line? X% anything one With What's to range target margins what metrics you profitability? If that I somewhere just that color

Michael Vesey

Yes, sure.

to the because look at to XXXX the when trying you're you do it, have best and I look looking into results think the to for consider way here. at our future acquisitions historical

a is rationalized I contribute start do business, Interwork, baseline So it it in which two would EBITDA with once first as during we thing, year million year. businesses year it's this about our acquired said would the into a we per and now. is $X

we in our Interwork. So year of months have results, current eight

want pick to you going we're to at year next it way. up four if So, that look

up full year we're just we'll fully Interwork $XXX,XXX a of because next picking So, say, of up EBITDA pick integrated year.

acquisition for EBITDA backwards was dollars the CDF actually, XXXX On but in about EBITDA $X looking year. their historical in that per ended financial their million year they June did

results year's to pick months, another this we up in two So, picked year close XX. we'll next up

you'll call it that up in acquisition. from you EBITDA So, don't another, pick million $X.X

between acquired $X million So, of fact in growth EBITDA on by we'll just them, the the numbers we virtue have two of year. next that have built the of line

So, it about you're be asking we crush look to what's that think high-single growth I the to on And digits number the to I between you're of Dale I I point if top talking the somewhere then that's is organic that digits get where out. and think the synergies businesses. businesses? opportunities the in that. well, what trying guess, model those in low-double the question was plus And of year think top organic is, to the that's be going to at and on starting next going growth

Unidentified Analyst

year up Well, then nice a a the and Wayside. great congrats really for transition again tying Great. and quarter, thanks on

Dale Foster

Thanks, Howard.

Operator

And this there time, at are questions sir. no

Mr. back to Foster. you, you. Thank it Turning

Dale Foster

us company about company. team and the back track we're to Yes, again, as engine for forward. going call it's building refer a I'm of everybody to on of going today the the the that thanks as keeping

that, right I'd The for go to news the up we thing that got a employees, turn down work. seeing really year optimism throughout support think we're super of operator. can out Board I face-to-face. from and You'll we challenging throughout the again, our again people, be it relationships during because But see with back us should got and teams thank as the and the time, thank we've you now the to the company. traveling get all summer and just of the facing all I now Directors, to start and supportive, continued like appreciate is for this soon we the productivity making biggest I'll and and it

Operator

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

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

Climb Global Solutions (CLMB) 2 Mar 212020 Q4 Earnings call transcript