Financial Data and Key Metrics Changes - Adjusted gross billings (AGB) increased by 14% to $274.7 million compared to $241.8 million in the prior year quarter [74] - Net sales rose by 20% to $81.7 million from $67.9 million, reflecting organic growth from new and existing vendors [74] - Gross profit as a percentage of adjusted gross billings was 5% compared to 5.2%, and as a percentage of net sales was 16.8% compared to 18.4% in the prior year quarter [5] - Net income decreased to $1.4 million or $0.31 per diluted share from $2.8 million or $0.63 per diluted share in the comparable period [41] - Adjusted EBITDA increased by 4% to $4.7 million compared to $4.5 million, with an effective margin of 34.1% compared to 35.8% in the year-ago period [76] Business Line Data and Key Metrics Changes - SG&A expenses increased to $11.6 million from $7.9 million, with SG&A as a percentage of adjusted gross billings rising to 4.2% from 3.3% [40] - The partnership with Radius has a different economic profile, recognizing total AGB generated while paying Radius 70% of their gross profit through SG&A [6] - The company continues to focus on adding new innovative vendors to its line card, which contributed to double-digit growth in AGB and operating EPS [8][72] Market Data and Key Metrics Changes - The company noted a slowdown in the data center side but continues to see strength in security technology segments [54][79] - There is a shift in the vendor mix, with new emerging vendors starting to chip away at the top 20 [11] - The company is targeting growth in the European market, identifying numerous acquisition opportunities [66] Company Strategy and Development Direction - The company is committed to organic and inorganic growth, focusing on strategic partnerships and enhancing its service offerings [38][49] - The management emphasized the importance of a focused line card to partner with strategic technology vendors [2] - The company plans to continue evaluating M&A opportunities to enhance its geographic footprint and service solutions [53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit growth in adjusted gross billings over the next several years [69] - The company is aware of the cyclicality and lumpiness associated with the Spinnakar acquisition, indicating some strong quarters ahead [88] - Management noted that while they do not provide detailed guidance, they are focused on long-term growth and the emerging vendor market [92] Other Important Information - The company announced a quarterly dividend of $0.017 per share, payable on August 18, 2023 [77] - The new $50 million revolving credit facility with JPMC provides additional capital and flexibility for growth [52] Q&A Session Summary Question: Are there any changes in the demand backdrop from last quarter? - Management noted no significant changes in demand, although some competitors have seen a slowdown in hardware sales [54] Question: Did the growth of the top 20 vendors grow in line with the business? - Management confirmed that the growth was consistent, with some exceptions as new vendors emerge [80] Question: Have valuations continued to improve on the acquisition side? - Management indicated that valuations have softened slightly but not drastically, maintaining a robust pipeline for acquisitions [12][82]
Climb Solutions(CLMB) - 2023 Q2 - Earnings Call Transcript