• Climb Global Solutions Reports Second Quarter 2023 Results

    Источник: Nasdaq GlobeNewswire / 02 авг 2023 15:05:00   America/Chicago

    Net Sales Up 20% YoY to $81.7 Million

    Ninth Consecutive Quarter of Profitability Improvements

    EATONTOWN, N.J., Aug. 02, 2023 (GLOBE NEWSWIRE) -- Climb Global Solutions, Inc. (NASDAQ:CLMB) (“Climb” or the “Company”), a value-added global IT channel company providing unique sales and distribution solutions for innovative technology vendors, is reporting results for the second quarter ended June 30, 2023.

    Second Quarter 2023 Summary vs. Same Year-Ago Quarter

    • Net sales increased 20% to $81.7 million.
    • Adjusted gross billings (a non-GAAP financial measure defined below) increased 14% to $274.7 million.
    • Gross profit increased 10% to $13.7 million.
    • Net income was $1.4 million or $0.31 per diluted share, compared to $2.8 million or $0.63 per diluted share.
    • Adjusted net income (a non-GAAP financial measure defined below) increased 12% to $3.1 million or $0.72 per diluted share.
    • Adjusted EBITDA (a non-GAAP financial measure defined below) increased 4% to $4.7 million.

    Management Commentary

    “We continued to execute our core initiatives during the quarter, leading to another period of double-digit growth on the top-line and our ninth consecutive quarter of profitability improvement,” said CEO Dale Foster. “We also made strategic investments throughout the quarter in operating systems, new personnel, and training and development to reinforce our infrastructure for future growth. With the integration of Spinnakar onto our platform and our growing presence overseas, we continue to believe that Climb is well equipped to deliver on our growth and profitability objectives in both the U.S. and abroad.

    “As we enter the back half of the year, we believe that the Company has a solid foundation in place to continue driving organic growth with existing vendors while adding new, innovative vendors to our line card. We will also continue to evaluate M&A opportunities that can enhance our service and solutions, in addition to our geographic footprint. These initiatives, coupled with our robust balance sheet, will enable us to execute our organic and inorganic growth objectives in 2023.”

    Dividend

    Subsequent to quarter end, on August 1, 2023, Climb’s Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable on August 18, 2023, to shareholders of record on August 14, 2023.

    Second Quarter 2023 Financial Results

    Net sales in the second quarter of 2023 increased 20% to $81.7 million compared to $67.9 million for the same period in 2022. This reflects double digit organic growth from new and existing vendors. In addition, adjusted gross billings in the second quarter of 2023 increased 14% to $274.7 million compared to $241.8 million in the year-ago period.

    Gross profit in the second quarter of 2023 increased 10% to $13.7 million compared to $12.5 million for the same period in 2022. The increase was primarily driven by organic growth of 10% from new vendors and the Company’s top 20 vendors in both North America and Europe.

    Selling, general, and administrative (“SG&A”) expenses in the second quarter of 2023 were $11.6 million compared to $7.9 million in the year-ago period. SG&A as a percentage of net sales was 14.2% compared to 11.7% in the same period in 2022. SG&A as a percentage of adjusted gross billings was 4.2% for the second quarter of 2023 compared to 3.3% in the year-ago period. The increase was primarily attributed to a one-time, $1.8 million grant of common stock awarded to the Company’s CEO in April 2023 and by investments in the Company’s infrastructure to drive future growth, including new personnel, costs related to its new ERP system, and employee training and development. In addition, SG&A was impacted by increased professional service fees and other costs that are non-recurring.

    Net income in the second quarter of 2023 was $1.4 million or $0.31 per diluted share, compared to $2.8 million or $0.63 per diluted share for the same period in 2022. The decrease was primarily attributed to the increases in SG&A as previously noted. Adjusted net income, which excludes the one-time grant, increased 12% to $3.1 million or $0.72 per diluted share, compared to $2.8 million or $0.63 per diluted share for the year-ago period.

    Adjusted EBITDA in the second quarter of 2023 increased 4% to $4.7 million compared to $4.5 million for the same period in 2022. The increase was driven by organic growth from both new and existing vendors, partially offset by investments in the Company’s infrastructure and costs associated with the Company’s acquisition of Spinnakar in August 2022. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, was 34.1% compared to 35.8% for the same period in 2022.

    On June 30, 2023, cash and cash equivalents were $43.9 million compared to $20.2 million on December 31, 2022, while working capital increased by $3.4 million during this period. The increase in cash was primarily attributed to the timing of receivable collections and payables. Climb had $1.6 million of outstanding debt on June 30, 2023, from the term loan closed in April of 2022, for which the proceeds were used to fund certain capital expenditures, with no borrowings outstanding under its new $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, August 3, 2023, at 8:30 a.m. Eastern time to discuss its results for the second quarter ended June 30, 2023.

    Climb management will host the conference call, followed by a question-and-answer period.

    Date: Thursday, August 3, 2023
    Time: 8:30 a.m. Eastern time
    Dial-in registration link: here
    Live webcast registration link: here

    If 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 Cloud Know How. 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 at 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, 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.com

    Investor Relations Contact

    Sean Mansouri, CFA
    Elevate IR
    (720) 330-2829
    CLMB@elevate-ir.com


          
    CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES 
    CONDENSED CONSOLIDATED BALANCE SHEETS 
     (Unaudited) 
    (Amounts in thousands, except share and per share amounts) 
          
      June 30,
    2023
     December 31,
    2022
     
          
    ASSETS 
          
    Current assets    
     Cash and cash equivalents$43,869  $20,245  
     Accounts receivable, net of allowance for doubtful accounts of $736 and $842, respectively 130,027   154,596  
     Inventory, net 3,228   4,766  
     Vendor prepayments and advances    890  
     Prepaid expenses and other current assets 7,651   4,141  
    Total current assets 184,775   184,638  
          
    Equipment and leasehold improvements, net 6,262   3,515  
    Goodwill 19,637   18,963  
    Other intangibles, net 19,423   19,693  
    Right-of-use assets, net 1,040   1,235  
    Accounts receivable long-term, net 1,259   3,114  
    Other assets 868   350  
    Deferred income tax assets 434   348  
          
    Total assets$233,698  $231,856  
          
    LIABILITIES AND STOCKHOLDERS' EQUITY 
          
    Current liabilities    
     Accounts payable and accrued expenses$157,471  $160,650  
     Lease liability, current portion 471   521  
     Term loan, current portion 530   520  
    Total current liabilities 158,472   161,691  
          
     Lease liability, net of current portion 1,087   1,296  
     Deferred income tax liabilities 4,290   4,137  
     Term loan, net of current portion 1,024   1,292  
     Non-current liabilities 1,843   2,866  
          
    Total liabilities 166,716   171,282  
          
          
    Stockholders' equity    
     Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares    
     issued, and 4,568,914 and 4,478,432 shares outstanding , respectively 53   53  
     Additional paid-in capital 33,476   32,715  
     Treasury stock, at cost, 715,586 and 806,068 shares, respectively (12,402)  (13,230) 
     Retained earnings 47,106   43,904  
     Accumulated other comprehensive loss (1,251)  (2,868) 
    Total stockholders' equity 66,982   60,574  
    Total liabilities and stockholders' equity$233,698  $231,856  
          


     
    CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
    (Unaudited)
    (Amounts in thousands, except per share data)
             
      Six months ended Three months ended
      June 30, June 30,
       2023   2022   2023   2022 
             
    Net Sales $166,771  $139,182  $81,732  $67,863 
             
    Cost of sales  137,870   114,716   68,039   55,377 
             
    Gross profit  28,901   24,466   13,693   12,486 
             
             
    Selling, general and administrative expenses  21,837   16,183   11,576   7,934 
    Amortization & depreciation expense  1,317   802   604   445 
    Total selling, general and administrative expenses  23,154   16,985   12,180   8,379 
             
    Income from operations  5,747   7,481   1,513   4,107 
             
    Interest, net  441   (17)  330   (7)
    Foreign currency transaction gain (loss)  40   (298)  (4)  (442)
    Income before provision for income taxes  6,228   7,166   1,839   3,658 
    Provision for income taxes  1,523   1,663   458   867 
             
    Net income $4,705  $5,503  $1,381  $2,791 
             
    Income per common share - Basic $1.05  $1.24  $0.31  $0.63 
    Income per common share - Diluted $1.05  $1.24  $0.31  $0.63 
             
    Weighted average common shares outstanding - Basic 4,381   4,315   4,396   4,321 
    Weighted average common shares outstanding - Diluted  4,381   4,315   4,396   4,321 
             
    Dividends paid per common share $0.34  $0.34  $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):    
             
      Six months ended Three months ended
      June 30, June 30, June 30, June 30,
       2023   2022   2023   2022 
    Net sales $166,771  $139,182  $81,732  $67,863 
    Costs of sales related to sales where the Company is an agent  414,653   341,328   192,980   173,950 
    Adjusted gross billings (Non-GAAP) $581,424  $480,510  $274,712  $241,813 
             
    (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):
             
      Six months ended Three months ended
      June 30, June 30, June 30, June 30,
       2023   2022   2023   2022 
             
    Net income $4,705  $5,503  $1,381  $2,791 
    Provision for income taxes  1,523   1,663   458   867 
    Depreciation and amortization  1,317   802   604   445 
    Interest expense  49   40   21   24 
    EBITDA  7,594   8,008   2,464   4,127 
    Share-based compensation  2,735   714   2,206   344 
    Adjusted EBITDA $10,329  $8,722  $4,670  $4,471 
             
             
      Six months ended Three months ended
      June 30, June 30, June 30, June 30,
    Components of interest, net  2023   2022   2023   2022 
             
    Amortization of discount on accounts receivable with extended payment terms $(29) $(8) $(18) $(6)
    Interest income  (461)  (15)  (333)  (11)
    Interest expense  49   40   21   24 
    Interest, net $(441) $17  $(330) $7 
             
    (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):
             
      Six months ended Three months ended
      June 30, June 30, June 30, June 30,
       2023   2022   2023   2022 
             
    Net income $4,705  $5,503  $1,381  $2,791 
    One-time CEO stock grant  1,796   -   1,796   - 
    Net income excluding one-time CEO stock grant $6,501  $5,503  $3,177  $2,791 
             
    Net income excluding one-time CEO stock grant per common share - diluted $1.46  $1.24  $0.72  $0.63 
             
    (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.


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