Climb Solutions(CLMB) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights This section provides an overview of Climb Global Solutions' exceptional financial performance in Q2 2025, highlighting significant growth across key metrics Summary of Q2 2025 Performance Climb Global Solutions reported exceptional performance in Q2 2025, with significant year-over-year increases across key financial metrics, including net sales, net income, and adjusted EBITDA, alongside substantial growth in gross billings Q2 2025 Key Financial Performance (in millions) | Metric | Q2 2025 Value | YoY Change | | :----- | :------------ | :--------- | | Net Sales | $159.3 | +73% | | Net Income | $6.0 | +74% | | Diluted EPS | $1.30 | +73.3% | | Adjusted Net Income | $6.4 | +68% | | Adjusted Diluted EPS | $1.39 | +67.5% | | Adjusted EBITDA | $11.4 | +64% | | Gross Billings | $500.6 | +39% | Management Commentary and Outlook CEO Dale Foster highlighted strong Q2 execution, driven by double-digit organic growth from strengthened customer relationships, new vendor partnerships, and market share expansion, complemented by the acquisition of DSS - Achieved double-digit organic growth by strengthening relationships with key customers, bolstering line card with new vendors, and growing market share in the U.S. and Europe[3] - Benefited from incremental contribution and seasonal strength of Douglas Stewart Software & Services, LLC (DSS), particularly from education customers[3] - Expects to capture operational efficiencies and enhance scalability with the fully implemented ERP system[4] - Remains focused on identifying strategic acquisition opportunities to enhance capabilities and complement the existing footprint[4] Detailed Second Quarter 2025 Financial Results This section provides an in-depth analysis of Climb Global Solutions' financial performance for Q2 2025, detailing net sales, gross profit, operating expenses, net income, and adjusted EBITDA Net Sales and Gross Billings Net sales for Q2 2025 increased significantly by 73% to $159.3 million, driven by both organic growth from new and existing vendors and the contribution from the DSS acquisition Net Sales and Gross Billings (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Sales | $159.3 | $92.1 | +73% | | Gross Billings | $500.6 | $359.8 | +39% | Gross Profit Gross profit for Q2 2025 increased by 42% to $26.3 million, primarily due to organic growth from new and existing vendors in North America and Europe, as well as the contribution from the DSS acquisition Gross Profit (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Gross Profit | $26.3 | $18.6 | +42% | Operating Expenses Selling, general, and administrative (SG&A) expenses increased to $16.4 million in Q2 2025, with $0.9 million attributed to DSS, while SG&A as a percentage of gross billings decreased, indicating improved efficiency SG&A Expenses (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | SG&A Expenses | $16.4 | $13.0 | +26.2% | | SG&A as % of Gross Billings | 3.3% | 3.6% | -0.3 ppts | - DSS acquisition represented $0.9 million of the increase in SG&A expenses[9] Net Income and EPS Net income for Q2 2025 increased substantially by 74% to $6.0 million, or $1.30 per diluted share, with adjusted net income also seeing a significant rise of 68% to $6.4 million, or $1.39 per diluted share Net Income and EPS (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Net Income | $6.0 | $3.4 | +74% | | Diluted EPS | $1.30 | $0.75 | +73.3% | | Adjusted Net Income | $6.4 | $3.8 | +68% | | Adjusted Diluted EPS | $1.39 | $0.83 | +67.5% | Adjusted EBITDA Adjusted EBITDA increased by 64% to $11.4 million in Q2 2025, driven by organic growth and the DSS acquisition, with the effective margin improving by 600 basis points to 43.3% Adjusted EBITDA (Q2 2025 vs. Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | Adjusted EBITDA | $11.4 | $6.9 | +64% | | Effective Margin | 43.3% | 37.3% | +600 bps | Balance Sheet and Liquidity As of June 30, 2025, cash and cash equivalents were $28.6 million, a slight decrease from year-end 2024 due to timing of receivables and payables, while working capital increased by $12.2 million, maintaining a strong liquidity position Key Balance Sheet and Liquidity Metrics (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :----- | :------------ | :----------- | :----- | | Cash and Cash Equivalents | $28.6 | $29.8 | -$1.2 | | Working Capital | N/A | N/A | +$12.2 | | Outstanding Debt | $0.5 | N/A | N/A | | Revolving Credit Facility | $0 (no borrowings) | N/A | N/A | - The decrease in cash was primarily attributed to the timing of receivable collections and payables[12] Non-GAAP Financial Measures This section outlines Climb Global Solutions' use of non-GAAP financial measures, providing reconciliations for adjusted net income and adjusted EBITDA, and detailing the operational metric of gross billings Overview of Non-GAAP Measures Climb Global Solutions uses non-GAAP financial measures, such as adjusted net income and adjusted EBITDA, as supplemental indicators of business performance, which are not substitutes for U.S. GAAP results - Non-GAAP financial measures, including adjusted net income and adjusted EBITDA, are used as supplemental measures of performance[18] - These measures have limitations and should not be considered in isolation or as substitutes for U.S. GAAP financial results[18] Adjusted Net Income Reconciliation Adjusted net income is defined as net income excluding acquisition-related costs (net of income taxes) and the change in fair value of acquisition contingent consideration, totaling $6.357 million for Q2 2025 Adjusted Net Income Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net Income | $5,968 | $3,430 | | Acquisition related costs, net of income taxes | $10 | $352 | | Change in fair value of acquisition contingent consideration | $379 | $0 | | Adjusted Net Income | $6,357 | $3,782 | | Adjusted net income per common share - diluted | $1.39 | $0.83 | Adjusted EBITDA Reconciliation Adjusted EBITDA is reconciled from net income by adding back provision for income taxes, depreciation, amortization, interest, share-based compensation, acquisition-related costs, and change in fair value of acquisition contingent consideration, totaling $11.379 million for Q2 2025 Adjusted EBITDA Reconciliation (Q2 2025 vs. Q2 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | | :----- | :------ | :------ | | Net Income | $5,968 | $3,430 | | Provision for income taxes | $1,774 | $1,012 | | Depreciation and amortization | $1,982 | $865 | | Interest expense | $90 | $60 | | Share-based compensation | $1,173 | $1,084 | | Acquisition related costs | $13 | $469 | | Change in fair value of acquisition contingent consideration | $379 | $0 | | Adjusted EBITDA | $11,379 | $6,920 | Gross Billings (Operational Metric) Gross billings, a key operational metric representing the total dollar value of customer purchases, net of returns and taxes, reached $500.553 million in Q2 2025, with strong contributions from both distribution and solutions segments - Gross billings are defined as the total dollar value of customer purchases of goods and services, net of customer returns and credit memos, sales, or other taxes, used to assess transaction volume or market share[19][28] Gross Billings by Segment (Q2 2025 vs. Q2 2024, in thousands) | Segment | Q2 2025 | Q2 2024 | YoY Change | | :------ | :------ | :------ | :--------- | | Distribution Gross Billings | $477,043 | $340,067 | +40.3% | | Solutions Gross Billings | $23,510 | $19,774 | +18.9% | | Total Gross Billings | $500,553 | $359,841 | +39.1% | Corporate Information This section provides essential corporate details, including dividend declarations, company overview, conference call information, forward-looking statements, and contact information for investor relations Dividend Declaration Subsequent to the quarter end, Climb's Board of Directors declared a quarterly dividend of $0.17 per share of common stock - A quarterly dividend of $0.17 per share of common stock was declared on July 29, 2025[6] - The dividend is payable on August 15, 2025, to shareholders of record on August 11, 2025[6] About Climb Global Solutions Climb Global Solutions, Inc. is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies, operating across the U.S., Canada, and Europe - Climb Global Solutions is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies[16] - The company operates across the U.S., Canada, and Europe through business units including Climb Channel Solutions, Grey Matter, and Climb Global Services[16] - Provides IT distribution and solutions for companies in Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries[16] Conference Call Information Climb Global Solutions will host a conference call on July 31, 2025, to discuss its second quarter 2025 results, with details provided for participation - A conference call to discuss Q2 2025 results will be held on Thursday, July 31, 2025, at 8:30 a.m. Eastern time[14] - Dial-in numbers: (800) 225-9448 (toll-free) or (203) 518-9708 (international), Conference ID: CLIMB[14] - A webcast and replay will be available on the investor relations section of the Company's website[14][15] Forward-Looking Statements The release contains forward-looking statements regarding future operating results and strategic goals, which are subject to various risks and uncertainties, including those related to acquisitions, market conditions, and competitive pressures - Statements in the release, other than historical facts, are 'forward-looking statements' subject to certain risks and uncertainties[20] - Factors that could cause actual results to differ materially include the ability to recognize anticipated benefits of acquisitions, continued acceptance of distribution channels, market conditions, and competitive pricing pressures[20] Company and Investor Relations Contacts Contact information is provided for the company's Chief Financial Officer and for investor relations inquiries - Company Contact: Matthew Sullivan, Chief Financial Officer, (732) 847-2451, MatthewS@ClimbCS.com[21] - Investor Relations Contact: Sean Mansouri, CFA or Aaron D'Souza, Elevate IR, (720) 330-2829, CLMB@elevate-ir.com[21] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including balance sheets and statements of income, providing a snapshot of the company's financial position and performance Condensed Consolidated Balance Sheets The condensed consolidated balance sheets present the company's financial position as of June 30, 2025, and December 31, 2024, showing changes in assets, liabilities, and stockholders' equity Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :------------ | :----------- | | Total Assets | $420,691 | $469,179 | | Total Liabilities | $315,514 | $378,591 | | Total Stockholders' Equity | $105,177 | $90,588 | Condensed Consolidated Statements of Income The condensed consolidated statements of income detail the company's financial performance for the three and six months ended June 30, 2025, and 2024, highlighting net sales, gross profit, and net income Key Income Statement Items (in thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $159,284 | $92,076 | $297,328 | $184,498 | | Gross Profit | $26,308 | $18,558 | $49,704 | $35,577 | | Income from operations | $7,956 | $4,250 | $12,733 | $7,753 | | Net Income | $5,968 | $3,430 | $9,650 | $6,161 | | Diluted EPS | $1.30 | $0.75 | $2.11 | $1.35 |