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Climb Global Solutions Reports Fourth Quarter and Full Year 2023 Results
Источник: Nasdaq GlobeNewswire / 28 фев 2024 16:05:01 America/New_York
Q4 2023 Net Sales, Net Income, Adjusted EBITDA and EPS Increase to Record Levels
FY 2023 Net Sales Increased 16% to a Record $352.0 Million with Net Income of $12.3 Million or $2.72 per Share; FY Adjusted EBITDA up 16% to $24.6 Million
EATONTOWN, N.J., Feb. 28, 2024 (GLOBE NEWSWIRE) -- Climb Global Solutions, Inc. (NASDAQ:CLMB) (“Climb”, the “Company”, “we”, or “our”), a value-added global IT channel company providing unique sales and distribution solutions for innovative technology vendors, is reporting results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Summary vs. Same Year-Ago Quarter
- Net sales increased 20% to $106.8 million.
- Adjusted gross billings (a non-GAAP financial measure defined below) increased 24% to $397.0 million.
- Net income increased 10% to $5.2 million or $1.15 per diluted share.
- Adjusted EBITDA (a non-GAAP financial measure defined below) increased 24% to $9.2 million.
FY 2023 Summary vs. FY 2022
- Net sales increased 16% to $352.0 million.
- Adjusted gross billings increased 18% to $1.3 billion.
- Net income was $12.3 million or $2.72 per diluted share, compared to $12.5 million or $2.81 per diluted share. Excluding a one-time CEO stock grant, net income increased 13% to $14.1 million or $3.13 per diluted share.
- Adjusted EBITDA increased 16% to $24.6 million.
Management Commentary
“Our Q4 performance capped off an exceptional year for Climb as we generated quarterly records across all key financial metrics, while delivering on our acquisition objectives,” said CEO Dale Foster. “These results were driven by the execution of our core initiatives and the integration of DataSolutions, which was acquired in October 2023 and was immediately accretive to earnings. We also continued to generate organic growth in both the U.S. and Europe as we deepened relationships with current customers while adding new, cutting-edge technologies to our line card.
“Looking ahead, our strategy remains unchanged: leverage our global infrastructure to drive organic growth while executing our M&A initiatives. We will continue to evaluate opportunities to expand our geographic footprint, as well as our service and solutions offerings. Between our robust balance sheet, a growing pipeline of prospective vendors and a demonstrated track record of accretive M&A, we are well positioned to continue driving shareholder value.”
Dividend
Subsequent to quarter end, on February 27, 2024, Climb’s Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable on March 15, 2024, to shareholders of record on March 11, 2024.
Fourth Quarter 2023 Financial Results
Net sales in the fourth quarter of 2023 increased 20% to $106.8 million compared to $88.9 million for the same period in 2022. This reflects organic growth from new and existing vendors, as well as contribution from the Company’s acquisition of DataSolutions Holdings Limited (“DataSolutions”) in October 2023. In addition, adjusted gross billings in the fourth quarter of 2023 increased 24% to $397.0 million compared to $319.8 million in the year-ago period.
Gross profit in the fourth quarter of 2023 increased 31% to $21.1 million compared to $16.1 million for the same period in 2022. The increase was driven by organic growth from new vendors and the Company’s top 20 vendors in both North America and Europe, as well as contribution from DataSolutions.
Selling, general, and administrative (“SG&A”) expenses in the fourth quarter of 2023 were $12.4 million compared to $9.1 million in the year-ago period. SG&A as a percentage of adjusted gross billings was 3.1% for the fourth quarter of 2023 compared to 2.9% in the year-ago period.
Net income in the fourth quarter of 2023 increased 10% to $5.2 million or $1.15 per diluted share, compared to $4.8 million or $1.06 per diluted share for the same period in 2022. The Company’s earnings per diluted share in the fourth quarter of 2023 was negatively impacted by $0.09 in FX and $0.06 in acquisition fees associated with DataSolutions.
Adjusted EBITDA in the fourth quarter of 2023 increased 24% to $9.2 million compared to $7.4 million for the same period in 2022. The increase was driven by the aforementioned organic growth, as well as contribution from DataSolutions. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, was 43.7% compared to 45.9% for the same period in 2022.
On December 31, 2023, cash and cash equivalents were $36.3 million compared to $20.2 million on December 31, 2022, while working capital decreased by $4.5 million during this period. The increase in cash was primarily attributed to the timing of receivable collections and payables, partially offset by the cash paid for the acquisition of DataSolutions (net of cash acquired) of $12.7 million. Climb had $1.3 million of outstanding debt on December 31, 2023, with no borrowings outstanding under its $50 million revolving credit facility.
For more information on the non-GAAP financial measures discussed in this press release, please see the section titled, “Non-GAAP Financial Measures,” and the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release.
Conference Call
The Company will conduct a conference call tomorrow, February 29, 2024, at 8:30 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2023.
Climb management will host the conference call, followed by a question-and-answer period.
Date: Thursday, February 29, 2024
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (877) 407-9716
International dial-in number: (201) 493-6779
Conference ID: 13744515
Webcast: Climb’s Q4 & FY 2023 Conference CallIf you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
The conference call will also be available for replay on the investor relations section of the Company’s website at www.climbglobalsolutions.com.
About Climb Global Solutions
Climb Global Solutions, Inc. (NASDAQ:CLMB) is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies. Climb operates across the US, Canada and Europe through multiple business units, including Climb Channel Solutions, Grey Matter and Climb Global Services. The Company provides IT distribution and solutions for companies in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries.
Additional information can be found by visiting www.climbglobalsolutions.com.
Non-GAAP Financial Measures
Climb Global Solutions uses non-GAAP financial measures, including adjusted gross billings, adjusted net income and adjusted EBITDA, as supplemental measures of the performance of the Company’s business. Use of these financial measures has limitations, and you should not consider them in isolation or use them as substitutes for analysis of Climb’s financial results under generally accepted accounting principles in the United States of America (“U.S. GAAP”). The attached tables provide definitions of these measures and a reconciliation of each non-GAAP financial measure to the most nearly comparable measure under U.S. GAAP.
Forward-Looking Statements
The statements in this release, other than statements of historical fact, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements are subject to certain risks and uncertainties. In this press release, many of the forward-looking statements may be identified by words such as ”look forward,” “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include, without limitation, our ability to recognize the anticipated benefits of the acquisition of DataSolutions, the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, the successful integration of acquisitions, contribution of key vendor relationships and support programs, inflation, as well as factors that affect the software industry in general. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described in the section entitled “Risk Factors” contained in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and from time to time in the Company’s filings with the Securities and Exchange Commission.
Company Contact
Drew Clark
Chief Financial Officer
(732) 389-0932
Drew@ClimbGS.comInvestor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
CLMB@elevate-ir.comCLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands, except share and per share amounts) December 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 36,295 $ 20,245 Accounts receivable, net of allowance for doubtful accounts of $709 and $842, respectively 222,269 154,596 Inventory, net 3,741 4,766 Vendor prepayments and advances — 890 Prepaid expenses and other current assets 6,755 4,141 Total current assets 269,060 184,638 Equipment and leasehold improvements, net 8,850 3,515 Goodwill 27,182 18,963 Other intangibles, net 26,930 19,693 Right-of-use assets, net 878 1,235 Accounts receivable long-term, net 797 3,114 Other assets 1,077 350 Deferred income tax assets 324 348 Total assets $ 335,098 $ 231,856 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 249,648 $ 160,650 Lease liability, current portion 450 521 Term loan, current portion 540 520 Total current liabilities 250,638 161,691 Lease liability, net of current portion 879 1,296 Deferred income tax liabilities 5,554 4,137 Term loan, net of current portion 752 1,292 Non-current liabilities 2,505 2,866 Total liabilities 260,328 171,282 Stockholders' equity Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares issued, and 4,573,448 and 4,478,432 shares outstanding , respectively 53 53 Additional paid-in capital 34,647 32,715 Treasury stock, at cost, 711,052 and 806,068 shares, respectively (12,623 ) (13,230 ) Retained earnings 53,215 43,904 Accumulated other comprehensive loss (522 ) (2,868 ) Total stockholders' equity 74,770 60,574 Total liabilities and stockholders' equity $ 335,098 $ 231,856 CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Amounts in thousands, except per share data) Year ended Three months ended December 31, December 31, 2023 2022 2023 2022 Net Sales $ 352,013 $ 304,348 $ 106,783 $ 88,905 Cost of sales 287,766 250,254 85,713 72,794 Gross profit 64,247 54,094 21,070 16,111 Selling, general and administrative expenses 44,330 34,144 12,400 9,120 Depreciation & amortization expense 2,798 2,054 864 697 Acquisition related costs 629 582 352 137 Total selling, general and administrative expenses 47,757 36,780 13,616 9,954 Income from operations 16,490 17,314 7,454 6,157 Interest, net 927 159 168 118 Foreign currency transaction gain (loss) (636 ) (941 ) (536 ) (142 ) Income before provision for income taxes 16,781 16,532 7,086 6,133 Provision for income taxes 4,458 4,035 1,840 1,372 Net income $ 12,323 $ 12,497 $ 5,246 $ 4,761 Income per common share - Basic $ 2.72 $ 2.81 $ 1.15 $ 1.06 Income per common share - Diluted $ 2.72 $ 2.81 $ 1.15 $ 1.06 Weighted average common shares outstanding - Basic 4,401 4,331 4,427 4,355 Weighted average common shares outstanding - Diluted 4,401 4,331 4,427 4,355 Dividends paid per common share $ 0.68 $ 0.68 $ 0.17 $ 0.17 Reconciliation of GAAP and Non-GAAP Financial Measures (unaudited) (Amounts in thousands, except per share data) The table below presents net sales reconciled to Adjusted Gross Billings (Non-GAAP) (1): Year ended Three months ended December 31, December 31, December 31, December 31, 2023 2022 2023 2022 Net sales $ 352,013 $ 304,348 $ 106,783 $ 88,905 Costs of sales related to sales where the Company is an agent 908,369 760,310 290,260 230,939 Adjusted gross billings (Non-GAAP) $ 1,260,382 $ 1,064,658 $ 397,043 $ 319,844 (1) We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to sales where the Company is an agent. We provided a reconciliation of adjusted gross billings to net sales, which is the most directly comparable US GAAP measure. We use adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business, and to analyze the changes to our accounts receivable and accounts payable. Our use of adjusted gross billings of product and services as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures. The table below presents net income reconciled to adjusted EBITDA (Non-GAAP) (2): Year ended Three months ended December 31, December 31, December 31, December 31, 2023 2022 2023 2022 Net income $ 12,323 $ 12,497 $ 5,246 $ 4,761 Provision for income taxes 4,458 4,035 1,840 1,372 Depreciation and amortization 2,798 2,054 864 697 Interest expense 264 71 170 16 EBITDA 19,843 18,657 8,120 6,846 Share-based compensation 4,148 1,897 726 406 Acquisition related costs 629 582 352 137 Adjusted EBITDA $ 24,620 $ 21,136 $ 9,198 $ 7,389 Year ended Three months ended December 31, December 31, December 31, December 31, Components of interest, net 2023 2022 2023 2022 Amortization of discount on accounts receivable with extended payment terms $ (50 ) $ (109 ) $ (9 ) $ (66 ) Interest income (1,141 ) (121 ) (329 ) (68 ) Interest expense 264 71 170 16 Interest, net $ (927 ) $ (159 ) $ (168 ) $ (118 ) (2) We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation and interest. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures. The table below presents net income reconciled to net income excluding one-time CEO stock grant (Non-GAAP) (3): Year ended Three months ended December 31, December 31, December 31, December 31, 2023 2022 2023 2022 Net income $ 12,323 $ 12,497 $ 5,246 $ 4,761 One-time CEO stock grant 1,796 - - - Net income excluding one-time CEO stock grant $ 14,119 $ 12,497 $ 5,246 $ 4,761 Net income excluding one-time CEO stock grant per common share - diluted $ 3.13 $ 2.81 $ 1.15 $ 1.06 (3) We define net income excluding one-time CEO stock grant as net income, plus the stock compensation expense recognized for the one-time CEO stock grant. We provided a reconciliation of net income excluding one-time CEO stock grant to net income, which is the most directly comparable U.S. GAAP measures. We use net income excluding one-time CEO stock grant as a supplemental measure of our performance to gain insight into comparison of our businesses profitability when compared to the prior year. Our use of net income excluding one-time CEO stock grant has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate one-time CEO stock grant, or similarly titled measures differently, which may reduce their usefulness as comparative measures.