[February 01, 2017] |
|
Connection Reports Fourth Quarter and Full Year 2016 Results
PC Connection, Inc. (dba Connection; NASDAQ: CNXN), an
industry-leading Global Technology Solutions Provider, today announced
results for the quarter ended December 31, 2016. Net sales for the
fourth quarter of 2016 increased by 7.5% to $735.5 million, compared to
$684.3 million for the prior year quarter. Gross profit increased by
6.8% from $91.9 million to $98.1 million in the fourth quarter of 2016
as compared to the fourth quarter of 2015. Net income for the quarter
ended December 31, 2016 decreased by 4.5% to $13.0 million, or $0.49 per
diluted share, compared to net income of $13.6 million, or $0.51 per
diluted share for the prior year quarter. Earnings per share, adjusted
for acquisition costs, restructuring charges, and amortization of
acquired intangibles, increased to $0.53 cents per share for the quarter
ended December 31, 2016, compared to $0.52 cents per share for the prior
year quarter.
The fourth quarter 2016 results include $1.5 million of acquisition and
restructuring costs. This charge includes professional fees related to
the GlobalServe acquisition and severance related to internal
restructuring activities. In addition, the Company has presented
separately amortization of acquired intangible assets in the income
statement, which was approximately $0.5 million in the quarter.
Net sales for the year ended December 31, 2016 were $2.7 billion, an
increase of $118.6 million or 4.6%, compared to $2.6 billion for the
year ended December 31, 2015. Gross profit increased by 8.8% from $341.0
million to $371.2 million due to higher net sales and a 54 basis-point
increase in gross margin for the year ended December 31, 2016. Net
income for the year ended December 31, 2016 increased by 2.7% to $48.1
million, or $1.80 per diluted share, compared to net income of $46.8
million, or $1.76 per diluted share, for the year ended December 31,
2015. Earnings per share, adjusted for acquisition costs, restructuring
charges, and amortization of acquired intangibles, increased to $1.90
cents per share for the year ended December 31, 2016, compared to $1.78
cents per share for the prior year. Earnings before interest, taxes,
acquisition, rebranding, and restructuring costs, depreciation and
amortization, and stock-based compensation expense ("Adjusted EBITDA")
totaled $95.5 million for December 31, 2016, compared to $89.5 million
for December 31, 2015.
Quarterly Performance by Segment:
-
Net sales for the SMB segment increased by 5.2% to $276.4 million in
the fourth quarter of 2016, compared to the prior year quarter. Strong
performance in advanced technology solution categories contributed to
a 3.9% increase in gross profit.
-
Net sales for the Large Account segment increased by 4.3% to $288.8
million in the fourth quarter of 2016, compared to the prior year
quarter. Gross margin improved by 51 basis points due to a strong
performance in software, which contributed to an 8.9% increase in
gross profit.
-
Net sales to the Public Sector segment increased by 17.7% to $170.4
million in the fourth quarter of 2016, compared to the prior year
quarter. Sales to the federal government increased by 46.1%, compared
to the prior year, while sales to state and local government and
educational institutions decreased by 3.8%. Notebooks/mobility sales
were strong in this segment with a 31.4% increase, and contributed to
a 10.0% increase in gross profit. The Company's Public Sector current
order backlog is up over $30 million from a year ago. This segment won
several large deals in the fourth quarter, driving the increase. Some
of these deals are at lower than average margins due to the
competitive nature of the bidding process.
Quarterly Sales by Product Mix:
-
Notebook/mobility sales, the Company's largest product category,
increased by 14% year over year and accounted for 22% of net sales in
the fourth quarter of 2016 compared to 20% of net sales in the prior
year quarter. Mobility continues to be a strategic focus area for
customers in all segments.
-
Software sales increased by 14% year over year and accounted for 21%
of net sales in the fourth quarter of 2016 compared to 20% of net
sales in the prior year quarter. We experienced growth in cloud-based
offerings, security, and virtualization.
Overall gross profit increased by $6.3 million, or 6.8%, in the fourth
quarter of 2016, compared to the prior year quarter. Consolidated gross
margin, as a percentage of net sales, decreased slightly to 13.3% for
the fourth quarter of 2016, compared to 13.4% for the prior year quarter.
Selling, general and administrative expenses increased in the fourth
quarter of 2016 to $76.2 million from $69.0 million in the prior year
quarter. Excluding acquisition costs, restructuring charges, and
amortization of acquired intangibles, SG&A expenses were $74.2 million
in the fourth quarter of 2016, with variable cost increasing due to
higher levels of gross profit. We also had three months of Softmart SG&A
in the current quarter. We continue to invest in technical solution
sales capabilities and expect SG&A expenses to rise accordingly.
However, we are highly focused on improving efficiencies and
streamlining wherever possible.
Total cash was $49.2 million at December 31, 2016, compared to $80.2
million at December 31, 2015. In January 2017, we paid a 34 cent per
share special dividend to shareholders, which totaled $9.0 million. The
Company generated positive cash flow of approximately $23 million for
2016 before the Softmart acquisition of $32 million, the GlobalServe
acquisition of $11 million, and the special dividend of $10.6 million.
Days sales outstanding were 48 days at December 31, 2016, and inventory
turns were 22 turns in the fourth quarter of 2016.
As announced last quarter, the Company acquired GlobalServe, Inc. on
October 11, 2016. GlobalServe has developed a portal designed to meet
its customers' global IT needs with consistent delivery, reporting,
pricing, and logistics. We are excited to be able to offer our customers
this global capability. This industry leading tool simplifies our
customers' global IT procurement and reduces their costs. We believe
that this acquisition gives us a competitive advantage in the market
place and expect this to be an important component of our future growth
strategy.
"The Company achieved record sales and gross profit this quarter in an
overall muted IT spending environment," said Timothy McGrath, President
and Chief Executive Officer. "The recent acquisitions of Softmart and
GlobalServe have expanded our capabilities and added significantly to
our customer count, sales headcount, and technical personnel. We believe
our team and the strategies we have in place position us well to gain
market share and increase long-term shareholder value," concluded Mr.
McGrath.
Non-GAAP Financial Information
Adjusted EBITDA, Adjusted EPS and Adjusted S,G & A are non-GAAP
financial measures. This information is included to provide information
with respect to the Company's operating performance and earnings.
About Connection
Connection (www.connection.com;
NASDAQ: CNXN), is the combined corporate brand name for PC Connection,
Inc., a Fortune 1000 company, along with its subsidiaries: PC Connection
Sales, GovConnection, and MoreDirect,, reflecting the Company's mission
to connect people with technology that enhances growth, elevates
productivity, and empowers innovation. Headquartered in Merrimack, NH
with offices throughout the United States, the Company continues to
deliver custom-configured computer systems overnight from our ISO
9001:2008 certified technical configuration lab at our distribution
center in Wilmington, OH. In addition, the company has over 2,500
technical certifications to ensure that we can solve the most complex
issues of our customers. Connections also services international
customers through its GlobalServe subsidiary, a global IT procurement
and service management company. Investors and media can find more
information about Connection at http://ir.connection.com.
Connection - Business Solutions (800-800-5555), (the original
business of PC Connection,) operating through our PC Connection Sales
Corp. subsidiary, is a rapid-response provider of IT products and
services serving primarily the small- and medium-sized business sector.
It offers more than 300,000 brand-name products through its staff of
technically trained sales account managers, publications, and its
website at www.connection.com.
Connection - Public Sector Solutions (800-800-0019), our
GovConnection, Inc. subsidiary, is a rapid-response provider of IT
products and services to federal, state, and local government agencies
and educational institutions through specialized account managers,
publications, and online at www.connection.com/publicsector.
Connection - Enterprise Solutions (561-237-3300), www.connection.com/enterprise,
our MoreDirect, Inc. subsidiary, provides corporate technology buyers
with best-in-class IT solutions, in-depth IT supply-chain expertise, and
access to over 300,000 products and 1,600 vendors through TRAXX™, a
proprietary cloud-based eProcurement system. The team's engineers,
software licensing specialists, and project managers help reduce the
cost and complexity of buying hardware, software, and services
throughout the entire IT lifecycle.
cnxn-g
# # #
"Safe Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements that are
based on currently available information, operating plans, and
projections about future events and trends. Terms such as "believe,"
"expect," "intend," "plan," "estimate," "anticipate," "may," "will," or
similar statements or variations of such terms are intended to identify
forward-looking statements, although not all forward-looking statements
include such terms. Forward-looking statements inherently involve risks
and uncertainties that could cause actual results to differ materially
from those predicted in such forward-looking statements. Such risks and
uncertainties, include, but are 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, market acceptance of
the Company's new branding, fluctuations in operating results, the
ability of the Company to manage personnel levels in response to
fluctuations in revenue, and other risks detailed in the Company's
filings with the Securities and Exchange Commission, including under the
caption "Risk Factors" in the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission for the year ended December
31, 2015. More specifically, the statements in this release concerning
the Company's outlook for selling, general, and administrative expenses,
the Company's efforts in improving efficiencies and streamlining its
business and other statements of a non-historical basis (including
statements regarding the Company's ability to increase market share and
enhance long-term shareholder value, and integrate its two acquisitions
in an effective manner, and the Company's continuing investments in
technical solution sales capabilities) are forward-looking statements
that involve certain risks and uncertainties. Such risks and
uncertainties include the ability to realize market demand for and
competitive pricing pressures on the products and services marketed by
the Company, the continued acceptance of the Company's distribution
channel by vendors and customers, continuation of key vendor and
customer relationships and support programs, the ability of the Company
to gain or maintain market share, and the ability of the Company to hire
and retain qualified sales representatives and other essential
personnel. The Company assumes no obligation to update the information
in this press release or revise any forward-looking statements, whether
as a result of any new information, future events, or otherwise, except
as required by law.
|
|
CONSOLIDATED SELECTED FINANCIAL INFORMATION
|
|
|
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At or for the Three Months Ended December 31,
|
|
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2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
% of
|
|
|
|
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|
% of
|
|
%
|
(Amounts and shares in thousands, except operating data, P/E
ratio, and per share data)
|
|
|
|
Net Sales
|
|
|
|
|
|
Net Sales
|
|
Change
|
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|
|
|
|
|
|
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|
|
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Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
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Net sales
|
|
|
$
|
735,548
|
|
|
|
|
|
$
|
684,323
|
|
|
|
7%
|
Diluted earnings per share
|
|
|
$
|
0.49
|
|
|
|
|
|
$
|
0.51
|
|
|
|
(4%)
|
Adjusted diluted earnings per share
|
|
|
$
|
0.53
|
|
|
|
|
|
$
|
0.51
|
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
13.3%
|
|
|
|
|
|
|
13.4%
|
|
|
|
|
Operating margin
|
|
|
|
3.0%
|
|
|
|
|
|
|
3.3%
|
|
|
|
|
Return on equity (1)
|
|
|
|
11.7%
|
|
|
|
|
|
|
12.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turns
|
|
|
|
22
|
|
|
|
|
|
|
22
|
|
|
|
|
Days sales outstanding
|
|
|
|
48
|
|
|
|
|
|
|
44
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|
|
|
|
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|
|
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|
|
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|
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% of
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% of
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Product Mix:
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|
|
Net Sales
|
|
|
|
|
|
Net Sales
|
|
|
|
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Notebooks/Mobility
|
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|
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22%
|
|
|
|
|
|
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20%
|
|
|
|
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Software
|
|
|
|
21
|
|
|
|
|
|
|
20
|
|
|
|
|
Servers/Storage
|
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|
9
|
|
|
|
|
|
|
12
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|
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Net/Com Products
|
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|
|
9
|
|
|
|
|
|
|
10
|
|
|
|
|
Other Hardware/Services
|
|
|
|
39
|
|
|
|
|
|
|
38
|
|
|
|
|
Total Net Sales
|
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|
|
100%
|
|
|
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
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|
|
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Stock Performance Indicators:
|
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|
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|
|
|
|
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Actual shares outstanding
|
|
|
|
26,609
|
|
|
|
|
|
|
26,498
|
|
|
|
|
Total book value per share
|
|
|
$
|
16.29
|
|
|
|
|
|
$
|
14.81
|
|
|
|
|
Tangible book value per share
|
|
|
$
|
13.05
|
|
|
|
|
|
$
|
12.81
|
|
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|
Closing price
|
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|
$
|
28.09
|
|
|
|
|
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$
|
22.64
|
|
|
|
|
Market capitalization
|
|
|
$
|
747,447
|
|
|
|
|
|
$
|
599,915
|
|
|
|
|
Trailing price/earnings ratio
|
|
|
|
15.6
|
|
|
|
|
|
|
12.9
|
|
|
|
|
LTM Adjusted EBITDA (2)
|
|
|
$
|
95,468
|
|
|
|
|
|
$
|
89,535
|
|
|
|
|
Adjusted market capitalization/LTM Adjusted EBITDA (3)
|
|
|
|
7.3
|
|
|
|
|
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Based on last twelve months' net income.
|
(2) Adjusted EBITDA is defined as EBITDA (earnings before
interest, taxes, depreciation and amortization) adjusted for
acquisition, rebranding, and restructuring costs, and stock-based
compensation.
|
(3) Adjusted market capitalization is defined as gross market
capitalization less cash balance.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
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REVENUE AND MARGIN INFORMATION
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31,
|
|
|
2016
|
|
|
|
|
2015
|
|
|
|
|
Net
|
|
|
|
Gross
|
|
|
|
Net
|
|
|
|
Gross
|
(amounts in thousands)
|
|
|
Sales
|
|
|
|
Margin
|
|
|
|
Sales
|
|
|
|
Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SMB
|
|
|
$
|
276,373
|
|
|
|
15.7
|
%
|
|
|
|
$
|
262,646
|
|
|
|
15.9
|
%
|
Large Account
|
|
|
|
288,812
|
|
|
|
12.2
|
|
|
|
|
|
276,980
|
|
|
|
11.6
|
|
Public Sector
|
|
|
|
170,363
|
|
|
|
11.5
|
|
|
|
|
|
144,697
|
|
|
|
12.3
|
|
Total
|
|
|
$
|
735,548
|
|
|
|
13.3
|
%
|
|
|
|
$
|
684,323
|
|
|
|
13.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
(amounts in thousands, except per share data)
|
|
|
|
Amount
|
|
|
|
% of Net Sales
|
|
|
Amount
|
|
|
|
% of Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
$
|
735,548
|
|
|
|
|
100.0
|
%
|
|
|
|
$
|
684,323
|
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
|
|
|
|
637,425
|
|
|
|
|
86.7
|
|
|
|
|
|
592,472
|
|
|
|
|
86.6
|
|
Gross profit
|
|
|
|
|
|
|
98,123
|
|
|
|
|
13.3
|
|
|
|
|
|
91,851
|
|
|
|
|
13.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and restructuring costs
|
|
|
|
|
|
|
1,511
|
|
|
|
|
0.2
|
|
|
|
|
|
296
|
|
|
|
|
0.0
|
|
Amortization of acquired intangible assets
|
|
|
|
|
|
469
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Selling, general and administrative expenses, other
|
|
|
|
|
74,242
|
|
|
|
|
10.1
|
|
|
|
|
|
68,664
|
|
|
|
|
10.1
|
|
Income from operations
|
|
|
|
|
|
|
21,901
|
|
|
|
|
3.0
|
|
|
|
|
|
22,891
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest/other expense, net
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
-
|
|
|
|
|
|
(20
|
)
|
|
|
|
-
|
|
Income tax provision
|
|
|
|
|
|
|
(8,890
|
)
|
|
|
|
(1.2
|
)
|
|
|
|
|
(9,258
|
)
|
|
|
|
(1.3
|
)
|
Net income
|
|
|
|
|
|
$
|
12,997
|
|
|
|
|
1.8
|
%
|
|
|
|
$
|
13,613
|
|
|
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
$
|
0.51
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the computation of earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
26,569
|
|
|
|
|
|
|
|
|
|
26,459
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
26,738
|
|
|
|
|
|
|
|
|
|
26,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
(amounts in thousands, except per share data)
|
|
|
|
Amount
|
|
|
|
% of Net Sales
|
|
|
Amount
|
|
|
|
% of Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
$
|
2,692,592
|
|
|
|
|
100.0
|
%
|
|
|
|
$
|
2,573,973
|
|
|
|
|
100.0
|
%
|
Cost of sales
|
|
|
|
|
|
|
2,321,435
|
|
|
|
|
86.2
|
|
|
|
|
|
2,232,954
|
|
|
|
|
86.8
|
|
Gross profit
|
|
|
|
|
|
|
371,157
|
|
|
|
|
13.8
|
|
|
|
|
|
341,019
|
|
|
|
|
13.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, rebranding and restructuring costs
|
|
|
|
|
3,406
|
|
|
|
|
0.1
|
|
|
|
|
|
1,026
|
|
|
|
|
-
|
|
Amortization of acquired intangible assets
|
|
|
|
|
|
|
846
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Selling, general and administrative expenses, other
|
|
|
|
|
286,385
|
|
|
|
|
10.7
|
|
|
|
|
|
261,439
|
|
|
|
|
10.2
|
|
Income from operations
|
|
|
|
|
|
|
80,520
|
|
|
|
|
3.0
|
|
|
|
|
|
78,554
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest/other expense, net
|
|
|
|
|
|
|
(67
|
)
|
|
|
|
-
|
|
|
|
|
|
(87
|
)
|
|
|
|
-
|
|
Income tax provision
|
|
|
|
|
|
|
(32,342
|
)
|
|
|
|
(1.2
|
)
|
|
|
|
|
(31,640
|
)
|
|
|
|
(1.2
|
)
|
Net income
|
|
|
|
|
|
$
|
48,111
|
|
|
|
|
1.8
|
%
|
|
|
|
$
|
46,827
|
|
|
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
$
|
1.81
|
|
|
|
|
|
|
|
|
$
|
1.77
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
$
|
1.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the computation of earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
26,528
|
|
|
|
|
|
|
|
|
|
26,398
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
26,719
|
|
|
|
|
|
|
|
|
|
26,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 acquisition,
rebranding and restructuring costs and 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 December 31,
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
|
|
2016
|
|
|
2015
|
|
|
% Change
|
Net income
|
|
|
$
|
12,997
|
|
|
$
|
13,613
|
|
|
|
|
|
|
$
|
48,111
|
|
|
$
|
46,827
|
|
|
|
Depreciation and amortization
|
|
|
|
2,948
|
|
|
|
2,364
|
|
|
|
|
|
|
|
10,453
|
|
|
|
8,961
|
|
|
|
Income tax expense
|
|
|
|
8,890
|
|
|
|
9,258
|
|
|
|
|
|
|
|
32,342
|
|
|
|
31,640
|
|
|
|
Interest expense
|
|
|
|
54
|
|
|
|
20
|
|
|
|
|
|
|
|
107
|
|
|
|
87
|
|
|
|
EBITDA
|
|
|
|
24,889
|
|
|
|
25,255
|
|
|
|
|
|
|
|
91,013
|
|
|
|
87,515
|
|
|
|
Acquisition, rebranding and restructuring costs (1)
|
|
|
|
1,511
|
|
|
|
296
|
|
|
|
|
|
|
|
3,406
|
|
|
|
1,026
|
|
|
|
Stock-based compensation
|
|
|
|
74
|
|
|
|
274
|
|
|
|
|
|
|
1,049
|
|
|
|
994
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
26,474
|
|
|
$
|
25,825
|
|
|
3%
|
|
|
$
|
95,468
|
|
|
$
|
89,535
|
|
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition, rebranding, and restructuring costs relate to our
2016 acquisitions, the re-branding of the Company to "Connection",
severance related to internal restructuring, duplicate costs
incurred with the move of our Chicago-area facility, and in 2015,
duplicate costs incurred with the transition to our new distribution
center.
|
|
|
|
|
|
|
|
|
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from Net Income to Adjusted Net Income is detailed
below. Adjusted Net Income is defined as Net Income plus the
Amortization of Acquired Intangible Assets and Acquisition,
Rebranding, and Restructuring Costs, net of tax. Adjusted Net Income
and Adjusted Earnings Per Share are considered non-GAAP financial
measures (see note above in Adjusted EBITDA for a description of
non-GAAP financial measures). We believe that these non-GAAP
disclosures provide helpful information with respect to our
operating performance.
|
(amounts in thousands, except per share data)
|
|
|
Three Months Ended December 31,
|
|
|
Years Ended December 31,
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
% Change
|
|
|
|
2016
|
|
|
|
2015
|
|
|
% Change
|
Net income
|
|
|
$
|
12,997
|
|
|
$
|
13,613
|
|
|
|
|
|
|
$
|
48,111
|
|
|
$
|
46,827
|
|
|
|
Acquisition, rebranding, and restructuring costs, net of tax (1)
|
|
|
|
898
|
|
|
|
176
|
|
|
|
|
|
|
|
2,037
|
|
|
|
613
|
|
|
|
Amortization of acquired intangible assets, net of tax (2)
|
|
|
|
279
|
|
|
|
-
|
|
|
|
|
|
|
|
506
|
|
|
|
-
|
|
|
|
Adjusted Net Income
|
|
|
$
|
14,174
|
|
|
$
|
13,789
|
|
|
|
|
|
|
$
|
50,654
|
|
|
$
|
47,440
|
|
|
|
Diluted shares
|
|
|
|
26,738
|
|
|
|
26,632
|
|
|
|
|
|
|
26,719
|
|
|
|
26,616
|
|
|
|
Adjusted Diluted Earnings per Share
|
|
|
$
|
0.53
|
|
|
$
|
0.52
|
|
|
2%
|
|
|
$
|
1.90
|
|
|
$
|
1.78
|
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition, rebranding, and restructuring costs relate to our
2016 acquisitions, the re-branding of the Company to "Connection,"
severance related to internal restructuring, duplicate costs
incurred with the move of our Chicago-area facility, and in 2015,
duplicate costs incurred with the transition to our new
distribution center.
|
(2) Amortization of acquired intangible assets relates to intangible
assets recorded as a result of our 2016 acquisitions.
|
|
ADJUSTED SELLING, GENERAL AND ADMINISTRATION EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation from selling, general and administration expenses
to adjusted selling, general and administration expenses is detailed
below. Adjusted selling, general and administration expenses is
defined as selling, general and administration expenses less
Acquisition, Rebranding, and Restructuring Costs and Amortization of
Acquired Intangible Assets. Adjusted selling, general and
administration expenses are considered non-GAAP financial measures
(see note above in Adjusted EBITDA and Adjusted EPS for a
description of non-GAAP financial measures). We believe that these
non-GAAP disclosures provide helpful information with respect to our
operating performance.
|
(amounts in thousands)
|
|
|
Three Months Ended December 31,
|
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
2016
|
|
|
2015
|
Selling, general and administration
|
|
|
$ 76,222
|
|
|
$ 68,960
|
|
|
|
|
|
$ 290,637
|
|
|
$ 262,465
|
Acquisition, rebranding, and restructuring costs (1)
|
|
|
(1,511)
|
|
|
(296)
|
|
|
|
|
|
(3,406)
|
|
|
(1,026)
|
Amortization of acquired intangible assets (2)
|
|
|
(469)
|
|
|
-
|
|
|
|
|
|
(846)
|
|
|
-
|
Adjusted selling, general and administration
|
|
|
$ 74,242
|
|
|
$ 68,664
|
|
|
|
|
|
$ 286,385
|
|
|
$ 261,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition, rebranding, and restructuring costs relate to our
2016 acquisitions, the re-branding of the Company to "Connection,"
severance related to internal restructuring, duplicate costs
incurred with the move of our Chicago-area facility, and in 2015,
duplicate costs incurred with the transition to our new
distribution center.
|
(2) Amortization of acquired intangible assets relates to
intangible assets recorded as a result of our 2016 acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
2016
|
|
|
|
2015
|
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
49,180
|
|
|
|
|
$
|
80,188
|
|
Accounts receivable, net
|
|
|
|
|
|
|
|
411,883
|
|
|
|
|
|
356,145
|
|
Inventories
|
|
|
|
|
|
|
|
90,535
|
|
|
|
|
|
102,780
|
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
5,453
|
|
|
|
|
|
4,254
|
|
Income taxes receivable
|
|
|
|
|
|
|
|
2,120
|
|
|
|
|
|
1,575
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
7,909
|
|
Total current assets
|
|
|
|
|
|
|
|
559,171
|
|
|
|
|
|
552,851
|
|
Property and equipment, net
|
|
|
|
|
|
|
|
39,402
|
|
|
|
|
|
32,227
|
|
Goodwill
|
|
|
|
|
|
|
|
73,602
|
|
|
|
|
|
51,276
|
|
Other intangibles, net
|
|
|
|
|
|
|
|
12,586
|
|
|
|
|
|
1,668
|
|
Other assets
|
|
|
|
|
|
|
|
1,373
|
|
|
|
|
|
1,052
|
|
Total Assets
|
|
|
|
|
|
|
$
|
686,134
|
|
|
|
|
$
|
639,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
$
|
177,862
|
|
|
|
|
$
|
166,516
|
|
Accrued expenses and other liabilities
|
|
|
|
|
|
|
31,047
|
|
|
|
|
|
36,207
|
|
Accrued payroll
|
|
|
|
|
|
|
|
21,345
|
|
|
|
|
|
19,280
|
|
Total current liabilities
|
|
|
|
|
|
|
|
230,254
|
|
|
|
|
|
222,003
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
19,602
|
|
|
|
|
|
21,615
|
|
Other liabilities
|
|
|
|
|
|
|
|
2,836
|
|
|
|
|
|
3,005
|
|
Total Liabilities
|
|
|
|
|
|
|
|
252,692
|
|
|
|
|
|
246,623
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
285
|
|
|
|
|
|
284
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
111,081
|
|
|
|
|
|
109,161
|
|
Retained earnings
|
|
|
|
|
|
|
|
337,938
|
|
|
|
|
|
298,868
|
|
Treasury stock at cost
|
|
|
|
|
|
|
|
(15,862
|
)
|
|
|
|
|
(15,862
|
)
|
Total Stockholders' Equity
|
|
|
|
|
|
|
|
433,442
|
|
|
|
|
|
392,451
|
|
Total Liabilities and Stockholders' Equity
|
|
|
|
|
|
$
|
686,134
|
|
|
|
|
$
|
639,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
2015
|
|
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
$
|
48,111
|
|
|
|
|
$
|
46,827
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
10,453
|
|
|
|
|
|
8,961
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
3,506
|
|
|
|
|
|
2,652
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
1,049
|
|
|
|
|
|
994
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
|
|
360
|
|
|
|
|
|
1,097
|
|
Loss on disposal of fixed assets
|
|
|
|
|
|
|
|
|
92
|
|
|
|
|
|
44
|
|
Excess tax benefit from exercise of equity awards
|
|
|
|
|
|
|
|
(513
|
)
|
|
|
|
|
(552
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
|
|
|
(33,835
|
)
|
|
|
|
|
(64,215
|
)
|
Inventories
|
|
|
|
|
|
|
|
|
12,401
|
|
|
|
|
|
(11,863
|
)
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
|
|
(1,274
|
)
|
|
|
|
|
(285
|
)
|
Other non-current assets
|
|
|
|
|
|
|
|
|
(321
|
)
|
|
|
|
|
(328
|
)
|
Accounts payable
|
|
|
|
|
|
|
|
|
(3,012
|
)
|
|
|
|
|
41,324
|
|
Accrued expenses and other liabilities
|
|
|
|
|
|
|
|
|
(3,431
|
)
|
|
|
|
|
6,206
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
|
33,586
|
|
|
|
|
|
30,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of equipment
|
|
|
|
|
|
|
|
|
(11,885
|
)
|
|
|
|
|
(12,337
|
)
|
Purchase of GlobalServe
|
|
|
|
|
|
|
|
|
(11,101
|
)
|
|
|
|
|
-
|
|
Purchase of Softmart
|
|
|
|
|
|
|
|
|
(31,889
|
)
|
|
|
|
|
-
|
|
Purchase of intangible asset
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
(450
|
)
|
Net cash used for investing activities
|
|
|
|
|
|
|
|
|
(54,875
|
)
|
|
|
|
|
(12,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payment
|
|
|
|
|
|
|
|
|
(10,591
|
)
|
|
|
|
|
-
|
|
Issuance of stock under Employee Stock Purchase Plan
|
|
|
|
|
|
|
961
|
|
|
|
|
|
875
|
|
Excess tax benefit from exercise of equity awards
|
|
|
|
|
|
|
|
513
|
|
|
|
|
|
552
|
|
Exercise of stock options
|
|
|
|
|
|
|
|
|
135
|
|
|
|
|
|
437
|
|
Payment of payroll taxes on stock-based compensation through shares
withheld
|
|
|
|
|
(737
|
)
|
|
|
|
|
(660
|
)
|
Net cash (used for) provided by financing activities
|
|
|
|
|
|
|
|
(9,719
|
)
|
|
|
|
|
1,204
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
|
|
|
|
|
(31,008
|
)
|
|
|
|
|
19,279
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
|
|
|
80,188
|
|
|
|
|
|
60,909
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
|
|
$
|
49,180
|
|
|
|
|
$
|
80,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures
|
|
|
|
|
|
|
|
$
|
109
|
|
|
|
|
$
|
504
|
|
Dividend declaration
|
|
|
|
|
|
|
|
$
|
9,041
|
|
|
|
|
$
|
10,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
|
|
|
|
|
$
|
29,740
|
|
|
|
|
$
|
30,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pccc-g
View source version on businesswire.com: http://www.businesswire.com/news/home/20170201006166/en/
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