Climb Global Solutions Inc (CLMB) 2011 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Wayside Technology Group conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and-answer session.

(Operator Instructions).

As a reminder, ladies and gentlemen, this conference is being recorded.

I would now like to introduce your host for today's conference, Ms.

Nathalie Turner.

Ms.

Turner, you may begin the conference at this

Thank

you, Sayid.

Thank you, and good morning, everyone.

Welcome to Wayside Technology's second-quarter 2011 earnings call.

Before turning the call over to Simon Nynens, the Company's Chairman and CEO, I'll dispense with the customary cautionary language and comment about the webcast for this earnings call.

We released earnings for the second quarter at approximately 5 PM Eastern Time Thursday, July 28, 2011.

The earnings release is available on the Company's Investor Relations website at waysidetechnology.com.

Today's call, including all questions and answers, is being webcast live and can be accessed via the website earnings.com.

A rebroadcast of this call will be available at waysidetechnology.com.

This conference call and the associated webcast contain time-sensitive information and is accurate only as of today, July 29, 2011.

A detailed discussion of risks and uncertainties are discussed in our Forms 10-Q and also in greater detail in our Forms 10-K.

Wayside Technology Group, Inc.

sees no obligation to update and does not intend to update any forward-looking statements.

Now, I would like to turn the call over to Simon.

Thank you, Nathalie, and good morning to everybody.

As always, I would like to start this call by thanking everyone here at Wayside Technology for delivering record results.

I'm very proud of the great team that we have here at Wayside Technology Group.

Revenue increased 25%, and income from operations grew even faster, 29%.

Our basic earnings per share at $0.28, diluted earnings per share at $0.26, and we've declared $0.16 per dividend per share.

Cash and marketable securities amount to $13.1 million, representing 48% of our equity as of the end of June.

We are very well financed and ready to invest in our future growth.

Dan Jamieson, our Vice President and General Manager of our Lifeboat division, will discuss his team's Q2.

Dan?

Thank you, Simon.

Lifeboat's Q2 results reflect solid year-over-year growth across all key segments of the business, including increases in revenue, margin, and income from operations.

The crucial growth factors in Lifeboat's Q2 results with the successful penetration and expansion of pivotal software lines within a variety of Lifeboat's premier reseller accounts including the LARs, large account resellers, and DMRs, the direct marketing resellers, along with the successful expansion of business within targeted solution providers, including VARs, the value added resellers, SIs, the systems integrators and other consultancy-type companies.

Lifeboat signed five new distribution agreements in Q2.

These new agreements will strengthen Lifeboat's portfolio and enhance our focus in our go-to-market concentration areas, including virtualization, security, application lifecycle management, database infrastructure, and application and network infrastructure.

Lifeboat's European office continues on a successful growth path.

Our pan-European operational capabilities coupled with our ability to process orders in euros, great British pounds and US dollars continues to be very attractive to the channel.

Thank you, Dan.

Now, Shawn Giordano, our Vice President for TechXtend and Programmer's division, will discuss his team's Q2.

Shawn?

Thank you, Simon.

Our performance in the second quarter was below expectations due to two factors.

It decreased in larger transactions defined as deals greater than $1 million where it continues to be extremely competitive, and weaker-than-expected results in our Canadian business.

Over all, individual sales rep performance increased and gross margin as a percentage of sales increased year-over-year indicating that our solutions' focus continues to resonate well with our customers.

The second quarter marked an important transition for our reseller division.

As of July 1, we merged Programmer's Paradise into TechXtend, and we'll move forward under this name as a single business unit.

This move will allow us to better position ourselves in the marketplace with a focus on the infrastructure and business intelligence tools and applications, while continuing to service our legacy customers.

Thank you, Simon.

Thank you, Shawn.

Kevin will discuss the balance sheet and income statement in a little bit more detail.

Kevin?

Thank you, Simon, and good morning, everyone.

I will discuss our second-quarter financial results on a company-wide basis as well as per segment.

Net sales were $60.7 million compared to $48.4 million last year, representing a 25% increase.

Sales for our Lifeboat segment were $49 million compared to $35.8 million last year, representing a 37% increase.

Sales for our TechXtend segment, formally our Programmer's segment were $11.7 million compared to $12.6 million last year, representing a 7% decrease.

Gross profit was $5.6 million compared to $4.7 million last year.

Gross profit as a percentage of sales was 9.2% compared to 9.7% last year.

Gross profit as a percentage of sales for TechXtend segment was 11.1% compared to 10.6% last year.

Gross profit as a percentage of sales for Lifeboat segment was at 8.8% compared to 9.4% last year.

Total selling, general and administrative -- SG&A expenses were $3.6 million compared to $3.2 million last year.

As a percentage of sales, SG&A expenses were 6% compared to 6.5% last year.

Selling costs increased by $240,000, the result of the increased volume in the Company's investing in and rewarding employees for sales growth.

Our net income amounted to $1.2 million compared to $1.1 million last year.

On a fully diluted basis, our earnings per share were $0.26 compared to the prior year at $0.23 per share.

Now moving on to the balance sheet.

Compared to our year-end balance sheet, the following accounts had significant fluctuations.

Accounts receivable decreased by $4.7 million and accounts payable decreased by $7.1 million, both due to the lower sales volume compared to the year-end quarter.

Accounts payable also decreased because the Company maximized the [totally] paid discounts.

During the quarter, the Company repurchased 22,106 shares and still has the authority to purchase another 422,899 shares as market conditions warrant.

Our book value per share is $5.76, and equity now stands at $27.1 million.

And cash and marketable securities make up 48% of equity.

This concludes my remarks.

Simon, back to you.

Thank you, Kevin.

Operator, we can now start with the Q&A session.