Financial Data and Key Metrics Changes - In Q1 2022, the company achieved a 13% increase in adjusted gross billings, reaching $238.7 million compared to $210.9 million in the prior year quarter [6] - Net sales increased by 13% to $71.3 million from $62.8 million year-over-year [6] - Net income surged by 79% to $2.7 million or $0.61 per diluted share, up from $1.5 million or $0.35 per diluted share in Q1 2021 [7] - Adjusted EBITDA rose by 61% to $4.2 million compared to $2.6 million in the previous year [7] - Cash and cash equivalents increased to $37 million as of March 31, 2022, up from $29.3 million at the end of 2021 [7] Business Line Data and Key Metrics Changes - Gross selling with the top 20 vendors grew nearly 20% to $171 million during the quarter, indicating strong organic growth [3] - Gross profit increased by 11% to $12 million compared to $10.8 million in Q1 2021, with gross profit as a percentage of adjusted gross billings at 5% [6][7] Market Data and Key Metrics Changes - The company has seen a significant increase in the number of brands looking to partner, evaluating over 50 new prospective brands and signing eight new agreements in Q1 [3] - The partnership with Cato Networks, a network security company, was highlighted as a notable addition to the company's offerings [4] Company Strategy and Development Direction - The company is focused on organic growth through existing vendors while also adding new and disruptive vendors to its line card [3] - M&A initiatives are ongoing, with discussions about multiple targets that can enhance geographic reach and service offerings [5] - The company aims to maintain a purposefully limited line card while expanding relationships with new vendor networks and customers globally [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue driving organic growth and meaningful operating leverage [8] - Concerns regarding supply chain issues in Europe were acknowledged, but management noted that their primary focus is on software, which remains strong despite hardware-related delays [20] - The company is preparing for a new ERP implementation to enhance operational efficiency and scalability [28][29] Other Important Information - The Board of Directors declared a quarterly dividend of $0.17 per share, payable on May 20, 2022 [8] - The company remains debt-free with no borrowings outstanding under its credit facilities [7] Q&A Session Summary Question: Thoughts on receivables management - Management indicated that their receivable portfolio turns quickly, with DSOs likely under 45 days, and they take advantage of early payment discounts with vendors [11][12] Question: Insights on new vendor agreements - Management noted that the recent agreements were a result of timing and a growing presence in the marketplace, leading to more vendors approaching them [17][18] Question: Future M&A activity - Management confirmed they are considering a range of acquisition sizes, from small tuck-ins to transformative opportunities, to enhance their business [19] Question: Observations on European market challenges - Management stated that while there are supply chain issues, their focus on software mitigates some of the risks associated with hardware delays [20] Question: Guidance on future growth and adjusted gross billings - Management discussed the potential for continued low double-digit growth and indicated that they would provide more directional guidance in upcoming calls [28][32]
Climb Solutions(CLMB) - 2022 Q1 - Earnings Call Transcript