WSTG - Earnings call transcript Q2 2021 | 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 Second Quarter ended June 30, 2021.

Joining us today are Wayside's CEO, Mr. Dale Foster; the Company's CFO, Mr. Drew Clark; and the Company's Investor Relations Adviser, Mr. Sean Mansouri with Elevate IR. have which the at was p.m. should earnings quarter approximately everyone release, press issued now, access second to XXXX X:XX By yesterday afternoon Time. Eastern The section Investor website release waysidetechnology.com. on Technology at Wayside Group's Relations is available of the webcast This Company's on website. available the replay call be will also for

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

Sean Mansouri

you. Thank

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

gross our accordance EBITDA directly billings most been Our presentation SEC business. measures to have adjusted also measures performance non-GAAP GAAP in includes non-GAAP reconciled and certain comparable adjusted supplemental including rules. All measures measures, as financial of with of the

Form we to I'll the the SEC to charts earnings furnished Dale reconciliation and over information yesterday. find other With press release CEO, call in and X-K Foster. You'll that, Wayside's turn the important

Dale Foster

everyone. Thank morning, and good you, Sean,

along results in respective metrics generated quarter with focus and second quarter, continued and during vendor of growth reflect growth financial We geographies across that exceptional of acquisitions are past from initiatives. both the key improvements and the and operating meaningful the organic the year inorganic our strong two all execution Our driving lines.

have line before, Number we vendors; from our and stated two, one, number with enhance growth of that emerging and customers; strategy addition balance earnings. flow sheet utilizing we've and existing drive As we card our core vendors number be our on new three accretive will to generate by to strategic acquisition do: free everything three, companies execute organic initiatives and that our acquire cash

higher deepen we vendor products. existing to the sales growth network, with Within focused the marketing relationships on continue and

unique remain to we data and continue cloud highs, to partners Spending to and product on their sell all-time our ability market actively products plan and and recognize Our channel lines customers. center security serving to further our depth by our by activity continue is on effective within partners. an the capitalizing relationships momentum as our of partners. this The customers for top and channel sales market reflected

of to in vendors. a $XXX truly our generated million we top and we quality million sales our generated annualized with of For gross XX% and our our instance, top $XXX than service speaks to Today, value XXXX, we of partners. sales offerings customers the XX, This more increase. the provide gross with XX

that reflected Signing customers. always more are front opportunities several to within speak of net in seek we these to put depth vendors StorONE growth the and most to new business we improvement, sales drive we've as both have network vendors Today, we continue our room Although the customer XX $X will and there key technologies and of list we improvements execute In existing breadth performance we network partnerships culture with made, on our continue know QX, that pleased within over customers, proactive XX and of line in is million-plus This on Wayside. our to we sales our have ensuring by deepen we like of announcements and in to also to compelling up relationships. new different various with across for generated is offer customers. our units marquee to reflection million a DXiQ. generated numbers we XXXX, with the companies some To is than have implemented in behind $X card. about sales

various geographies, we front, divisions the in all across acquisition working seek through multiple the scale On actively drive while opportunities of to Company. and strategic operating efficiencies to continue levers,

we market. servicing distribution two brands highly During rebranded and to together is integration with driving emerging process Solutions, brings share efficiencies. CDF's vendor a Sigma relationships, shared software the seamless Climb growth made focus quarter, which technology Sigma the which channel for respected on business and Climb many Channel a

benefits MSP As from but slate forward help by platform of I and clients our self-service distinguish competition. will software our this delivery. community. only a explore to is our not you partners Expedition with cloud week, extending we of look Expedition technology the Climb how subscription-based interact new marketplace to new future that efficiently to our MSPs with may we flexible launched providing transact and seen, their that and and Expedition, earlier vendors also on emerging for reach a designed us are benefits more moving marketplace to model hybrid Expedition -- VARs updates our solutions. enables customers, have how vendors into the

acquired, competition, by an Wayside several have continued of well opportunity us distribution Ingram Synnex as from the billion Platinum with In with in companies. don't focus consolidation the top create on pro combined technology that that Micro's past year, companies even company solutions. will our of support chain Equity sales. need distribution like the and billion large acquisition supply provides to most as boots merged logistics, which players the is tech merger forma high-tech through of in industry distribution or separate will Tech Emerging greater been Data, the including $X $XX than pack. in the generate a either ground, the which we the these offer more annual our Companies offer simply Speaking

reason, market. the this differentiate Wayside positioned segment to this of win in For is well and itself

want the to turn additions discuss Wayside I team. I the call few key to Before new a over,

are our of XX $XX the First, and nearly the three to we Services, Senior more of experience of addition the worldwide. deepen the brings Board HPE Vice Board division financing asset the in across Gold Financial with decades Gerri to Gerri and is a executive President bench thrilled where Director. as COO currently and of assets she billion Packard, than management Hewlett countries on IT oversees

community. within firm improve help a retained Relations IR our the to new investment Elevate also Investor We and communications awareness

on to vision next emerging he as the platform Medisolv Drew and understanding to differentiated improved including engage a Bancorp. companies. required brings in efforts, business, has the company our bolster outstanding new finally, most take our the and track And Wayside and of felt the broader served solutions CFO. technology of of time of COO going public forward. momentum working multiple an for record results and of we He SafeNet forward Boards, as Drew creating was driving right shares Given strong keen the has look level. we for with both financial critical in work public to June, brand. audience to a we profile to private Drew infrastructure Clark Elevate our our served and importantly, And and our a IR distribution recently Howard appointed and Most

introduce ado, without as Drew So you further through I'd financial everyone takes our to like he to Drew? Clark results.

Drew Clark

in pivotal the thank time be at introduction, to and for joining the Dale, team such you warm history. I'm the a thrilled absolutely Company's

incremental variance prior So referred right was XX% quarter as million like organic million ago commentary contribution our and May in to quarter to growth I'd the comparisons in the in year let's both the unless period. to specified. jump sales as otherwise the and reflects that second to from month into strong all CDF the from $XX.X Net Interwork, XXXX increased which one XXXX. $XX.X well acquisition results. This of acquired compared benefit of the of note

to expenses $XXX,XXX November expense, organic primarily quarter CDF increased with we $X of to from cost CDF of by regarding CDF second all and by second comments growth and of the increased Adjusted related expenses, Interwork, $XX.X growth various the growth from and related core profit quarters million, and with earlier of inorganic increase selling compared of operations $XX.X in our an $X.X measure, of which a $XXX.X million $XXX,XXX million Interwork $X.X expenses from offset $X sales Again, increases, part in to of with ahead. to of estimated to growth as our or Excluding XX% of Again, defense acquisition costs. execution also the and million prior associated the the primarily $X.X million will organic both to SG&A were of the business driven net were billings, million XX% include the the the employee organic we in respectively. record with related to $XX.X in $XXX,XXX incremental XXXX. quarter and an increase that growth year-over-year, in reinforces year's delivered our acquisition-related benefit gross XX% experienced prior the million compared bid costs organic acquisitions. well million, and expenses increased continued quarter. increased or this as non-recurring in a the by X.X estimated the of Dale's which investments were Interwork, attributable was expenses expect Gross to these we and compared to million drive increase $X.X operations $XX profit contributing Interwork continued period. $XXX,XXX XXXX and of approximately last million, million and with to contribution acquisitions, amortization strong $XXX.X the CDF CDF million XX% years from the or non-GAAP in gross CDF separation These unsolicited strategies. of and

USDXX compared increased income net in points benefits the EBITDA percentage adjusted per or leverage. or share a quarter compared organic quarter. and and XX, XXXX not trend. to strong million in EBITDA increased increase timing a million was credit stock, facilities, XX.X% our $XXX,XXX GBPX by as the as XXXX, profit an Net in August our XXXX of Board either million As no the as Effective the of it's of defined compared Cash operating a of June Xrd, million driven XX, was $XX.X XX% growth sales, $X.XX to primarily of indication of August SG&A $X.X to under with $X.X to XX% quarter or share. million. to as to in aforementioned margin, million The XX.X% on The XX, were of prior $XX.X Directors compared of compared debt-free Citibank. expected operating increased XXth On XX.X%. to gross or second flows, the quarter acquisition remains dividend second any driven well on borrowings diluted declared by outstanding basis of XXX per decrease both common record second of to as was with per Xx million Company The of XXXX. to shareholders $X.X $X.XX cash December and U.K. quarterly of a equivalents diluted $X.XX as XXXX. approximately payable cash August share percentage business Adjusted

strong provide position our cash our results have of to balance acquisition continues and organic to with our the our and growth quarter, levels towards desired Looking growth achieve second the profitability. of company, do the both execute flexibility we, to to and our work of on flow liquidity strong a strategies. still XXXX, as operating Despite us

prepared we'll ample short As term our see to balance customers our with we XXXX, up network. at now it opportunities goals, open we forward to achieving term growth the capture so and while concludes meaningful look our This long look continuing vendor both and questions. and to build for long-term relationships of remarks,

Operator

[Operator Ed we Instructions] from And a Woo. have question

Ed Woo

COVID positive? steam terms again what the they quarter. on of possibly or My in Congratulations terms customers? about It's Do that are of environment and business is, the stuff? working or feel is running out upticks people you hearing home of enterprise in are concerned -- question they from on from your

Dale Foster

definitely in a I marketplace into we enterprise little Ed. from it it's our and that you QX, about feel the into We -- the our going Thanks, And and wide the both when group we're optimism of think customers, it think I it's resellers bit just it, the vendors. from support. that we talked see

talked I it the about think, heading we back that before we office. were to

filling there. things. seeing I are optimism in which in out up, but the definitely We positive. pipeline been teams that's results dragging the actual back Our July it Xth, see the side in we're on of past, so is But have all I think there's yes, think

a good thing. that's So

Ed Woo

is of seeing lot another of capacity of M&A my next And in are do there what a of guys ready this and there are you terms And on you opportunities question guys opportunities. Great. that terms Are in you for at terms M&A, time? acquisition out valuations? in to take feel

Dale Foster

Yes.

sheet it's we're some in depending to -- to outside the leverage like. me start far that we definitely moves balance in as that that solutions. going good a a it have first. and of for list. they are of can Let we services the can looks have a we're our Company very as the that the was -- our going to to do It's part with as But where distribution, with to right the that the right I many go the engaged our us. right targets the and strategy in business. quite on acquisition a make sure to not higher upstream, go makes for Europe on the you put our that could I type position and Interwork kind be of talked we fits going the near strategic Western focus can to group go, financially target we did mean select time definitely in We mean, the and you with way be of take We'll be not U.S., part what it's it's We've it's been you going there. on I always do what make tell past. MSP, I lanes. CDF. consolidated future targets and that it's of about There few in is strategic see,

quarters, So that, we in upcoming the it. can you'll about see talk

Operator

comes next [Howard Out Ro]. Instructions] question from [Operator

Unidentified Analyst

two Drew, this one My Dale, question, is see. Congratulations, holes. -- that on I glaring really quarter. questions. just It's was Dale and XXXX, cloud, in -- the started great the you have a to results wonderful One when you of

cloud had on think you and had project started I the working acquired no it. platform. had CDF, know, distribution, what You you that's then which a and I cloud you you And there does but revenue views could done? growth? or talk that to work Are if -- meant you about that it more project is is your you do? satisfied with what to And

Dale Foster

the never of whether it But will transact. it how comes about to piece a used, were project all see different a you'll The actually cloud the done Yes. I is to direction they Expedition. when with them. because you're talked one the finally -- that even actually the or mean, be we it's for before it coding the it It we long is in Climb providers, want We correct. hybrid launched CDF we cloud going same underlying acquired that and time.

that vendors doing there. far in Microsoft moving don't the because and at it's are here's so fast as but track if So get as might subscriptions we it, going get as basis. little it our dollars They're separately look them side. direction, a is issue and as the months monthly it go far acceleration was where new not But that they're moving as is to just on a on more Microsoft you there, as take now, XX to and

perpetual in that and subscription move our go they as see So our to direction, licenses sales from you'll based.

we that before the that we really go outside on are of there's many go shift that born just in a of into our it we capturing can that kind revenues, couldn't when cloud. just companies territories So new into will additional of be but plan

vendors vendors just for to more cloud just up that are with. can So that we at look transact opens us

So that to it's we're to of able way. really really -- the that it was and the rest new market way so be it transact to

actually about one it. numbers see looking And we you'll that the -- us So lot, do the start year talk a talking on next QX. -- QX, will probably and about then and

Unidentified Analyst

Great.

billings that, into finally of if at see which couple And billings, as what the a bit could that are years. profit many all the in second your kind adjusted of you gross potential? you at do up at of from segues gross or line. I'm at I I gross to are around up -- want do what you about just at when net look attention for overall I'm growth? following And next here, really closing is I year-over-year growth the kind it's talk your that XX% is a it and potential on in billings. beginning, adjusted and I'm of for look X% for really years $X size. the looking finally I gross -- I XX% not. that mean, year-over-year which growth of sustainable after you what from business? question, of I So in is and sales then future I your the for And forward, a I of kind that looking -- very at looking you're what's movement, stages pin mean, seeing, gross paying into to you're think But adjusted isn't out, take figured of product XX% sequentially, five later that don't if billion rate you kind middle, dropping that, market to profit that look is whether -- And little places And really already you growth. my

Dale Foster

smallest the range and of billions competitors, and look guess have far if Yes. next at the $XX I was the in of billion. macro in talked Aero it the the -- as ScanSource as release about -- you at dollars level, I our I look large

that it's so -- Tech -- competitors their disruptive whether investors, There's go make can can headroom for targets, a When effective saying we now, already market but and are mean, we -- there we're targets. we'll of the us we grow some are rate, size very Aero has at data aspects that not I'm of there consolidation double in vendors. and And I are it or or divisions, be Synnex, say certain But of happened. disruptive. It's being lot right, to we can we to that our So I really. in tell many Ingram not the so combination. many like so

approaching years, and in looked we signed only vendors three we've at the So XXX that last we've are XX.

look So mean, a that's XXX year. we'll at I over -- We're nonstop.

have We really about XX And in. a coming months it's vendors, relation a recruit vendors full top team. have we we those look didn't XX at with them If ago. our

to move million? business our and the some have that of there's get as coming singles, products you as the wood that's kind say, the of that many the getting is to have are and can results do. that but group, on So -- only issue it's is bring just -- servicing where out work long just in of margins about to more company some sold. the the deal them, either of possible with it's that $XX That's the that's single going And time. that We'll even thing the at out saying, some to of we that simple portfolio bringing and the doing with already can to you're are million there best needs going then some margins we'll wow, in. we're what we their And $XX we're And done We talks the them U.S. focus piece margins low which all you business. jettison growing the -- them of can to see million way it's that. the ones that product, not those okay, hitting possible. up our that $XX The keeping vendors, And CDF the in with bolster service of industry that hitting are as already,

Unidentified Analyst

gross view then And talk about percentage number or profit profit see as Is that, it a gross gross Great. percentage -- do billings? you how number? of a the dollar you as side adjusted of that

Dale Foster

to collecting Howard, as by, the at The right, the gross look growth, -- side. nets every accounting as piece, profit a given the we're the that's have it's billings, You're it because you day. that's gross part how far X%. should of track you and the actually gross us GAAP count money adjusted need we profit. But look for, our to GAAPing gross Yes, you at billings

Our major they're stuff range. in sub-X doing competitors, the

that love as where out it's the take They one vendors. it thing drop do know, that you'll our as actually next a point piece gets the that's how And get the off, But some keep -- going to that that? goal. more line. to we're point we business bottom but and leverage feel accretive much gross of goes the when like stuff drop to much you has, really about to to far profit competition, No. inflection business we add Are and and in through. an our have really when We close over the once Do us we judge five you gross direction. riding we'd that put while we by show we're see that to and inflection will then can can they in us the Yes, it, see that that how of do profit and train, spend public, launch, at scale? that it and

Operator

from Ramsley. our And question comes next Walter

Walter Ramsley

rate the maybe should in idea a like for second tax down of just Can Super look us was that an half the for and quarter. full Question quarter. you Congratulations. about it the year? give little the what

Drew Clark

CDF and has factor actually of you overall European our Yes, rate component historical our when rate. predominantly the tax due lower lowered tax acquisition some rates thereof, in the effective Walter, slightly the various tax effective than the trends, is to parts

balance probably that for the XX.X%, look we overall. to So XX.X% year year the be end at of and

Walter Ramsley

little? business? that into talk Has Or like that just company, they've And their good. sounds over problems. had your could a SolarWinds about Okay. spilled the mean, That you I

Dale Foster

really us. their partner Yes. Walter. was time a little ours. QX of spent to team a affecting been getting everybody's with down it SolarWinds. Austin talked bit because back with in the great doubled office. We We've They've on actually as Thanks, We've

a recovery some twofold tools them, of split and we've one going we that of divisions in MSP off the on. we'll signed to see So with actually so have with contract N-able, QX, They their continue called from going They're approach they're to SolarWinds they the legacy yes, monitoring. their company. and going actually do good retooling a market forward. to some and with how But go

So of see stuff some I into QX. we'll think, exciting out that come

Just like we've and a has quarters. good -- been been had soft strong with it's them, Sophos quarters

their Sophos for been firewalls, announced their firewall this or and -- to bolster well. a new boosting quarter that's as sales just

Operator

at questions further no it Dale Foster for over I time. have will final to remarks. turn We this

Dale Foster

if thanks shareholders. you your updating Thanks Sean. requests put And you for reach we're me just support. Board out for in. all Appreciate to Thanks, with to the there operator, that doing. hook have keep the what any Directors. to We'll investor the and definitely on community Thanks question up the and of

Board. it. charging everybody's got thanks the And Our to so again. our different just Boards it. And Appreciate with it, to everybody, look this week thank meetings you, employees, great appreciate strong, back a and

Operator

and gentlemen. today's This ladies you participating. conference. you, Thank for Thank concludes

disconnect. now may You

Climb Global Solutions (CLMB) 8 Aug 212021 Q2 Earnings call transcript