SECOND QUARTER SUMMARY:
Net sales for the six months ended
Quarterly Sales by Segment:
Quarterly Sales by Product Mix:
Overall gross profit dollars decreased by
Selling, general and administrative dollars decreased in the second
quarter of 2015 to
The Company generated significant cash flow during the six months ended
"The Company had solid performance this quarter in a challenging IT
environment. We were able to increase earnings despite having to compare
against the industry leading growth rates that we experienced in the
prior year," said
Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP financial measure. This information is included to provide information with respect to the Company's operating performance and earnings.
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"Safe Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements that are
subject to risks and uncertainties, including, but not limited to, the
impact of changes in market demand and the overall level of economic
activity and environment, or in the level of business investment in
information technology products, competitive products and pricing,
product availability and market acceptance, new products, fluctuations
in operating results, and the ability of the Company to manage costs in
response to fluctuations in revenue, and other risks that could cause
actual results to differ materially from expectations, including those
detailed under the caption "Risk Factors" in the Company's Annual Report
on Form 10-K filed with the
CONSOLIDATED SELECTED FINANCIAL INFORMATION | ||||||||||||||||||
At or for the Three Months Ended |
2015 | 2014 | ||||||||||||||||
% of | % of | % | ||||||||||||||||
(Amounts and shares in thousands, except operating data, P/E ratio, and per share data) | Net Sales | Net Sales | Change | |||||||||||||||
Operating Data: | ||||||||||||||||||
Net sales | $ | 627,622 | $ | 633,244 | (1 | %) | ||||||||||||
Diluted earnings per share | $ | 0.44 | $ | 0.43 | 2 | % | ||||||||||||
Gross margin | 13.2 | % | 13.2 | % | ||||||||||||||
Operating margin | 3.1 | % | 3.0 | % | ||||||||||||||
Return on equity (1) | 12.4 | % | 12.1 | % | ||||||||||||||
Inventory turns | 24 | 28 | ||||||||||||||||
Days sales outstanding | 43 | 40 | ||||||||||||||||
Product Mix: | ||||||||||||||||||
Notebooks/Tablets | $ | 148,481 | 24 | % | $ | 136,126 | 22 | % | 9 | % | ||||||||
Software | 111,454 | 18 | 104,157 | 16 | 7 | % | ||||||||||||
Desktops | 68,662 | 11 | 76,733 | 12 | (11 | %) | ||||||||||||
Video, Imaging & Sound | 55,862 | 9 | 56,775 | 9 | (2 | %) | ||||||||||||
Net/Com Products | 49,833 | 8 | 57,908 | 9 | (14 | %) | ||||||||||||
|
35,332 | 6 | 37,175 | 6 | (5 | %) | ||||||||||||
Storage | 34,272 | 5 | 39,452 | 6 | (13 | %) | ||||||||||||
Servers | 28,025 | 4 | 24,671 | 4 | 14 | % | ||||||||||||
Memory & System Enhancements | 19,181 | 3 | 21,349 | 3 | (10 | %) | ||||||||||||
Accessories/Services/Other | 76,520 | 12 | 78,898 | 13 | (3 | %) | ||||||||||||
Total Net Sales | $ | 627,622 | 100 | % | $ | 633,244 | 100 | % | (1 | %) | ||||||||
Stock Performance Indicators: | ||||||||||||||||||
Actual shares outstanding | 26,396 | 26,224 | ||||||||||||||||
Total book value per share | $ | 14.23 | $ | 12.94 | ||||||||||||||
Tangible book value per share | $ | 12.23 | $ | 10.89 | ||||||||||||||
Closing price | $ | 24.74 | $ | 20.68 | ||||||||||||||
Market capitalization | $ | 653,037 | $ | 542,312 | ||||||||||||||
Trailing price/earnings ratio | 14.8 | 14.1 | ||||||||||||||||
LTM Adjusted EBITDA (2) | $ | 83,813 | $ | 73,595 | ||||||||||||||
Adjusted market capitalization/LTM Adjusted EBITDA (3) | 6.9 | 6.5 | ||||||||||||||||
(1) Based on last twelve months' net income. | ||||||||||||||||||
(2) Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation. | ||||||||||||||||||
(3) Adjusted market capitalization is defined as gross market capitalization less cash balance. | ||||||||||||||||||
REVENUE AND MARGIN INFORMATION | ||||||||||||||||||
For the Three Months Ended |
2015 | 2014 | ||||||||||||||||
Net | Gross | Net | Gross | |||||||||||||||
(amounts in thousands) | Sales | Margin | Sales | Margin | ||||||||||||||
SMB | $ | 259,346 | 15.4 | % | $ | 268,056 | 15.3 | % | ||||||||||
Large Account | 231,803 | 12.4 | 222,276 | 12.3 | ||||||||||||||
Public Sector | 136,473 | 10.5 | 142,912 | 10.8 | ||||||||||||||
Total | $ | 627,622 | 13.2 | % | $ | 633,244 | 13.2 | % | ||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Three Months Ended |
2015 | 2014 | ||||||||||||||
(amounts in thousands, except per share data) | Amount | % of Net Sales | Amount | % of Net Sales | ||||||||||||
Net sales | $ | 627,622 | 100.0 | % | $ | 633,244 | 100.0 | % | ||||||||
Cost of sales | 544,635 | 86.8 | 549,478 | 86.8 | ||||||||||||
Gross profit | 82,987 | 13.2 | 83,766 | 13.2 | ||||||||||||
Start-up costs - new distribution center | 271 | - | - | - | ||||||||||||
Selling, general and administrative expenses, other | 63,093 | 10.1 | 64,564 | 10.2 | ||||||||||||
Income from operations | 19,623 | 3.1 | 19,202 | 3.0 | ||||||||||||
Interest/other expense, net | (39 | ) | - | (26 | ) | - | ||||||||||
Income tax provision | (7,955 | ) | (1.2 | ) | (7,747 | ) | (1.2 | ) | ||||||||
Net income | $ | 11,629 | 1.9 | % | $ | 11,429 | 1.8 | % | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.44 | $ | 0.44 | ||||||||||||
Diluted | $ | 0.44 | $ | 0.43 | ||||||||||||
Shares used in the computation of earnings per common share: | ||||||||||||||||
Basic | 26,363 | 26,206 | ||||||||||||||
Diluted | 26,616 | 26,487 | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Six Months Ended |
2015 | 2014 | ||||||||||||||
(amounts in thousands, except per share data) | Amount | % of Net Sales | Amount | % of Net Sales | ||||||||||||
Net sales | $ | 1,208,881 | 100.0 | % | $ | 1,193,004 | 100.0 | % | ||||||||
Cost of sales | 1,048,281 | 86.7 | 1,036,391 | 86.9 | ||||||||||||
Gross profit | 160,600 | 13.3 | 156,613 | 13.1 | ||||||||||||
Start-up costs - new distribution center | 271 | - | - | - | ||||||||||||
Selling, general and administrative expenses, other | 126,527 | 10.5 | 125,665 | 10.5 | ||||||||||||
Income from operations | 33,802 | 2.8 | 30,948 | 2.6 | ||||||||||||
Interest/other expense, net | (38 | ) | - | (36 | ) | - | ||||||||||
Income tax provision | (13,551 | ) | (1.1 | ) | (12,352 | ) | (1.0 | ) | ||||||||
Net income | $ | 20,213 | 1.7 | % | $ | 18,560 | 1.6 | % | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.77 | $ | 0.71 | ||||||||||||
Diluted | $ | 0.76 | $ | 0.70 | ||||||||||||
Shares used in the computation of earnings per common share: | ||||||||||||||||
Basic | 26,354 | 26,204 | ||||||||||||||
Diluted | 26,605 | 26,485 | ||||||||||||||
EBITDA AND ADJUSTED EBITDA | ||||||||||||||||||||
A reconciliation of EBITDA and Adjusted EBITDA is detailed below. Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either includes or excludes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance including our ability to fund our future capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreements. | ||||||||||||||||||||
(amounts in thousands) |
Three Months Ended |
LTM Ended |
||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | |||||||||||||||
Net income | $ | 11,629 | $ | 11,429 | $ | 44,334 | $ | 38,990 | ||||||||||||
Depreciation and amortization | 2,179 | 1,786 | 8,599 | 7,616 | ||||||||||||||||
Income tax expense | 7,955 | 7,747 | 29,886 | 25,757 | ||||||||||||||||
Interest/other expense, net | 39 | 26 | 88 | 89 | ||||||||||||||||
EBITDA | 21,802 | 20,988 | 82,907 | 72,452 | ||||||||||||||||
Stock-based compensation | 225 | 327 | 906 | 1,143 | ||||||||||||||||
Adjusted EBITDA | $ | 22,027 | $ | 21,315 | 3 | % | $ | 83,813 | $ | 73,595 | 14 | % | ||||||||
(1) LTM: Last twelve months | ||||||||||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS | 2015 | 2014 | ||||||||||||||||||
(amounts in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 72,497 | $ | 60,909 | ||||||||||||||||
Accounts receivable, net | 332,899 | 293,027 | ||||||||||||||||||
Inventories | 98,575 | 90,917 | ||||||||||||||||||
Deferred income taxes | 7,749 | 7,749 | ||||||||||||||||||
Prepaid expenses and other current assets | 5,168 | 5,332 | ||||||||||||||||||
Income taxes receivable | 2,118 | 212 | ||||||||||||||||||
Total current assets | 519,006 | 458,146 | ||||||||||||||||||
Property and equipment, net | 29,878 | 27,861 | ||||||||||||||||||
Goodwill | 51,276 | 51,276 | ||||||||||||||||||
Other intangibles, net | 1,568 | 1,953 | ||||||||||||||||||
Other assets | 818 | 724 | ||||||||||||||||||
Total Assets | $ | 602,546 | $ | 539,960 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||
Accounts payable | $ | 162,374 | $ | 124,893 | ||||||||||||||||
Accrued expenses and other liabilities | 29,234 | 22,011 | ||||||||||||||||||
Accrued payroll | 14,290 | 17,793 | ||||||||||||||||||
Total current liabilities | 205,898 | 164,697 | ||||||||||||||||||
Deferred income taxes | 18,864 | 18,803 | ||||||||||||||||||
Other liabilities | 2,229 | 2,452 | ||||||||||||||||||
Total Liabilities | 226,991 | 185,952 | ||||||||||||||||||
Stockholders' Equity: | ||||||||||||||||||||
Common stock | 283 | 282 | ||||||||||||||||||
Additional paid-in capital | 108,289 | 106,956 | ||||||||||||||||||
Retained earnings | 282,845 | 262,632 | ||||||||||||||||||
Treasury stock at cost | (15,862 | ) | (15,862 | ) | ||||||||||||||||
Total Stockholders' Equity | 375,555 | 354,008 | ||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 602,546 | $ | 539,960 | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
Six Months Ended |
2015 | 2014 | |||||||||
(amounts in thousands) | |||||||||||
Cash Flows from Operating Activities: | |||||||||||
Net income | $ | 20,213 | $ | 18,560 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 4,370 | 3,863 | |||||||||
Provision for doubtful accounts | 718 | 365 | |||||||||
Stock-based compensation expense | 463 | 486 | |||||||||
Deferred income taxes | 61 | 57 | |||||||||
Excess tax benefit from exercise of equity awards | (95 | ) | (34 | ) | |||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | (40,590 | ) | (12,641 | ) | |||||||
Inventories | (7,658 | ) | (18,046 | ) | |||||||
Prepaid expenses and other current assets | (1,742 | ) | 2,057 | ||||||||
Other non-current assets | (94 | ) | 22 | ||||||||
Accounts payable | 37,231 | 28,392 | |||||||||
Accrued expenses and other liabilities | 3,597 | (2,232 | ) | ||||||||
Net cash provided by operating activities | 16,474 | 20,849 | |||||||||
Cash Flows from Investing Activities: | |||||||||||
Purchases of equipment | (5,752 | ) | (3,493 | ) | |||||||
Proceeds from sale of equipment | - | 10 | |||||||||
Net cash used for investing activities | (5,752 | ) | (3,483 | ) | |||||||
Cash Flows from Financing Activities: | |||||||||||
Issuance of stock under Employee Stock Purchase Plan | 435 | 360 | |||||||||
Exercise of stock options | 379 | 16 | |||||||||
Excess tax benefit from exercise of equity awards | 95 | 34 | |||||||||
Payment of payroll taxes on stock-based compensation through shares withheld | (43 | ) | (34 | ) | |||||||
Net cash provided by financing activities | 866 | 376 | |||||||||
Increase in cash and cash equivalents | 11,588 | 17,742 | |||||||||
Cash and cash equivalents, beginning of period | 60,909 | 42,547 | |||||||||
Cash and cash equivalents, end of period | $ | 72,497 | $ | 60,289 | |||||||
Non-cash Investing Activities: | |||||||||||
Accrued capital expenditures | $ | 455 | $ | 343 | |||||||
Supplemental Cash Flow Information: | |||||||||||
Income taxes paid | $ | 16,500 | $ | 10,933 |
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