Financial Data and Key Metrics Changes - In Q4 2021, adjusted gross billings increased 16% to $262.1 million compared to $226.4 million in the prior year quarter [16] - Net sales in Q4 2021 increased 6% to $75.5 million compared to $71.4 million [16] - Gross profit in Q4 2021 increased 20% to a record $12.6 million compared to $10.5 million [18] - Net income in Q4 2021 increased 36% to $3.4 million or $0.78 per diluted share compared to $2.5 million or $0.58 per diluted share in the prior year quarter [19] - Adjusted EBITDA in Q4 increased 17% to $5.1 million compared to $4.4 million [19] Business Line Data and Key Metrics Changes - Adjusted gross billings in North America with top 20 vendors increased 25% to $588 million in 2021 from $471 million in 2020 [8] - CDF contributed $10 million to total gross profit and accounted for 25% of overall growth in gross profit [10] - SG&A expenses in Q4 were $8.2 million compared to $7.7 million, but as a percentage of adjusted gross billings, it declined to 3.1% from 3.4% in Q4 2020 [18] Market Data and Key Metrics Changes - The company became an approved vendor for the NCPA contract, allowing access to over 90,000 agencies nationwide [12] - The majority of sales are from North America, followed by the UK and other parts of Europe [35] Company Strategy and Development Direction - The company focuses on three growth initiatives: driving organic growth, adding new emerging vendors, and pursuing acquisitions [8] - Plans to integrate CDF and Wayside back-offices under a uniform ERP platform to achieve cost synergies [11] - The company is actively evaluating M&A opportunities both domestically and internationally [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, highlighting strong liquidity and growth opportunities [21] - The ongoing geopolitical situation, particularly in Ukraine, has minimal direct impact on the company's business [14] - There is an increase in demand for security solutions due to rising cyber threats [35] Other Important Information - The company declared a quarterly dividend of $0.17 per share, payable on March 18 [20] - A new board member, Greg Scorziello, was appointed, bringing extensive experience in global operations [13] Q&A Session Summary Question: Accounts receivable increased significantly in Q4, what happened? - Management noted that larger customers delayed payments towards year-end, but all were collected post year-end, with no indication of a continuing trend [24] Question: Is the jump in adjusted gross billings from Q3 to Q4 a one-off? - Management indicated that Q4 typically sees stronger performance due to budget renewals, and they expect continued growth as they build their public sector practice [27] Question: How does the company view the use of stock versus cash for acquisitions? - Management stated they have not needed to use stock for acquisitions and prefer cash, but would consider equity if a transformative opportunity arises [28] Question: Can you elaborate on the impact of ASC 606 and CDF's revenue? - Management explained that the accounting mechanisms affect net sales, with a significant portion of revenue related to software solutions and ongoing support from vendors [32] Question: How has the geopolitical landscape affected sales opportunities? - Management noted an increase in inquiries for security solutions, but did not see a dramatic rise in sales opportunities compared to six months ago [35]
Climb Solutions(CLMB) - 2021 Q4 - Earnings Call Transcript