Climb Global Solutions Inc (CLMB) 2014 Q4 法說會逐字稿

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

(Operator Instructions) As a reminder, ladies and gentlemen, this conference call may be recorded.

I would now like to introduce your host for today's conference Melanie Caponigro.

Ms. Caponigro, you may begin your conference at this time.

Thank you and good morning.

Welcome to Wayside Technology's fourth-quarter 2014 earnings call.

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

We released earnings for the fourth quarter at approximately 5 PM Eastern time Thursday, February 5. The earnings release is available at the Company's investor relations website at Wayside Technology.com.

Today's call, including all questions and answers, is being webcast live, and a rebroadcast will be available at www.Wayside Technology.com/earnings-call.

This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 6, 2015.

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

Thank you, Melanie.

And good morning to everybody.

Q4 revenue increased 5% in Q4 to $94.1 million, gross profit decreased 11% and income from operations decreased 22%.

For the year, revenue increased 13% to $341 million, gross profit increased 2% and income from operations decreased 6%.

In these year-to-date results are included severance and one-time expenses of about $400,000.

In addition, we invested in expanding our sales and support staff and we added a field sales team, all to support the great growth of our Lifeboat division.

Our Lifeboat division represented 85% of our revenue in 2014.

Cash and long-term receivables were $31 million and represented 78% of equity, or $6.29 a share, as of the end of December 2014.

Working capital amounted to 79% of equity also at the end of December.

Our Lifeboat division continued to perform very well.

Revenue was up 28% in Q4 and margin was up 8%.

For the year, revenue was up 22% and margin was up 10%.

Our TechXtend division underperformed significantly as compared to last year.

Revenue was down 57%, and gross margin was down 50% for the quarter.

For the year, revenue was down 20% and margin was down 19%.

Let me start with TechXtend.

We had the opportunity to close several large deals in the fourth quarter of 2012 and 2013.

Yet unfortunately, we did not have the same opportunities this year.

These deals were flexible payment plan deals, meaning they typically related to long-term receivables.

As a result of the lower volume, cash increased, as you saw on our balance sheet.

Lifeboat performed very well in Q4.

Our margin stabilized and went up versus the first three quarters, and we were able to further expand our reach.

Looking at the future, we have realigned our sales forces in 2014 under the guidance of Bill Botti, our Executive Vice President, who joined us in April of 2014.

Considering the continued substantial increase in our Lifeboat distribution business, we made the strategic decision to recruit talent, improve services and to build a field sales team.

We believe that these investments are not only appropriate but necessary to enhance our reach and position and fuel future growth.

We will continue to invest in our future by hiring new talent and adding new vendor partnerships.

Looking at the future and also at the valuation as a Company, we believe that our stock price does not properly reflect our value.

The Board has therefore approved an increase of 500,000 shares of common stock to the number of shares of common stock available for repurchase, and we will continue to buy back shares according to our 10b(5) plan.

Total shares available for buyback is 700,000 shares as per the end of 2014.

In addition, I wanted to take this opportunity to publicly congratulate Vito Legrottaglie and Kevin Scull.

Vito Legrottaglie has been promoted to the position of Vice President and Chief Information Officer.

Mr. Legrottaglie has been our VP of Operations and Information Systems since April 2007.

He previously held the position of VP of Information Systems since June 2003.

Kevin Scull has been promoted to Vice President and Chief Accounting Officer.

Mr. Scull has been our Vice President and interim Chief Financial Officer since February 2014.

He previously held the position of VP and Chief Accounting Officer since January 2006.

We are excited about the prospect of more software publishers joining us.

Customer and fan mail feedback confirms that we are on the right track.

Our customer service is outstanding.

We care and our customers notice.

We look forward to an even better 2015.

Now I would like to hand it over to Bill Botti, our Executive Vice President.

Thank you, Simon.

As noted in our release, this was the tale of two quarters in that Lifeboat business grew a robust 28% while our TechXtend segment contracted 57% when compared to last year due to a decrease in our extended payment term transactions.

Our investment and growth strategy in Lifeboat is beginning to show return, as demonstrated by the 28% growth in the quarter with an 8% increase in GP as a result of our increased sales volume.

TechXtend's overall business remains solid except for the extended payment term business, which are traditionally large transactions.

As stated previously, we are focusing our efforts in TechXtend in New Jersey and the Northeast and are beginning to see more solution opportunities that include higher-margin opportunities.

The new field sales organization brought on in Q3 and Q4 within Lifeboat are a big part of our increased expenses in Lifeboat but are responsible for recruiting a combined 284 new resellers to Lifeboat that should provide a good return in 2015.

We are actively seeking partnerships with select vendors as part of our strategy to become more solutions oriented, similar to our announcement last week of a partnership with ExitGrid storage.

We continue to manage our expenses and build our product portfolio to help achieve our continued growth targets.

Thank you.

Simon, back to you.

Thank you, Bill.

Kevin Scull will now report on the financial numbers.

Kevin?

Thank you, Simon.

And good morning to investors, analysts and employees.

I will discuss our fourth-quarter financial results both on a consolidated basis as well as by business segment.

Net sales for the quarter were $94.1 million.

This is compared to $89.9 million last year, representing a 5% increase on a consolidated basis.

Sales from our Lifeboat distribution segment were $83.8 million and represent 89% of our total revenue during the quarter.

Lifeboat sales reflect a 28% increase compared to Q4 last year.

The increase in sales in the Lifeboat segment was mainly the results of the strengthening of our account penetration and the addition of several key product lines.

Sales from our TechXtend segment were $10.3 million compared to $24.2 million in Q4 last year, representing a 57% decrease.

The decrease in sales as mentioned was primarily due to a decrease in our extended payment terms sales transactions in the current quarter.

On a consolidated basis, our gross profit was $7 million compared to $7.8 million for the fourth quarter of 2013, representing 11% decrease.

Our gross profit margin for the quarter was 7.4% compared to 8.7% last year.

Lifeboat distributions gross profit for the quarter was $5.7 million.

This compared to $5.3 million last year, representing 11% increase.

This increase was primarily due to higher sales volume in the current year.

Our TechXtend segment's gross profit was $1.2 million and decreased by 50% as compared to the prior year.

The decrease in gross profit was primarily due to decreased extended payment sales transactions in the quarter.

Vendor rebates and discounts for the quarter amounted to $500,000, or 0.5% of net sales, compared to $700,000, or 0.8% of net sales, for the prior year.

Total selling, general and administrative expenses were $4.2 million compared to $4.3 million in the prior year.

Our net income for the quarter was $1.8 million compared to $2.5 million last year.

Earnings per share on a fully diluted basis were $0.39 per share compared to $0.55 in the prior year.

Moving on to the balance sheet.

Compared to our prior year end, the following key accounts had fluctuations.

Cash was a healthy $23.1 million at year end compared to $19.6 million last year.

This increase is comprised primarily of $5.7 million generated from net cash flow from operations and $1.8 million received from stock options.

This was offset by dividend payments of $3.2 million and $700,000 of purchase of treasury stock.

Accounts receivable, current and long term, decreased by 3%.

This was primarily due to a lower level extended payment term transactions in 2014.

Accounts payable and accrued expenses decreased by 8% due to the decrease in large extended payment term transactions.

The Company has no debt.

We do have a $10 million revolving credit facility that can be used for working capital purposes including financing of larger deals.

As of December 31, we have no outstanding balances under the credit facility.

Working capital at year end was $31 million.

During the quarter, we repurchased approximately 11,000 shares of our common stock under our stock purchase plan.

We still have authorization to buy back approximately 199,000 shares under this plan.

We have Board authorization to repurchase up to approximately 700,000 shares.

Our stockholder equity now stands at $39.6 million.

At our February 5, 2015 Board meeting, the Board of Directors declared a $0.17 dividend per share for its common stock, payable February 27.

The Company has now paid dividends consecutively for the last 48 quarters.

In conclusion, the Company continues to have solid operating results, a strong balance sheet and is adequately capitalized to support our continued growth plans.

I want to personally thank all of our team members worldwide.

Simon, I'll turn it back to you.

Thank you, Kevin.

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

(Operator Instructions) I'm showing no one in the queue at this time, sir.

Thank you.

We want to thank everybody for their interest in our Company, and we look forward to reporting our first-quarter results in April 2015.

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

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