Climb Global Solutions (CLMB) 7 Aug 242024 Q2 Earnings call transcript

Good morning, everyone, and welcome, and thank you for participating in today's conference call to discuss Climb Global Solutions financial results for the second quarter ended June 30, 2024.

Joining us today are Climb's CEO, Mr. Dale Foster; the company's CFO, Mr. Drew Clark; and the company's Investor Relations Advisor, Mr. Sean Mansouri, with Elevate IR.

have which the at was p.m. should earnings quarter approximately everyone release, press issued now, access second to XXXX X:XX By yesterday afternoon Time. Eastern The section Investor website release www.climbglobalsolutions.com. in Global at Climb Solutions' Relations is available of the webcast This company's on website. available the replay call be will also for

Following management's open for your the remarks, call we questions. will

comments. like to now over would the call to Mr. I turn Mansouri for introductory

Thank you.

date under on are like introduce that in remind to listeners forward-looking uncertainties statements SEC. made Dale, considered made from comments subject webcast any with and undertakes reliance I'd These revision to Private Reform by forward-looking call. the the of being this I any risks Litigation call Before Except to are the of certain to conference XXXX. Securities Act this not release the filings results forward-looking statements, to required that of publicly obligation or statements uncertainties statements. These from forward-looking are time no statements. subject place to as those of the cause undue certain that materially forward-looking only Do as known these and in forward-looking on and unknown statements time as risks company company's as actual any and reflected are described the differ are law, well results also which other to revise could assumptions

our in income Our reconciled comparable GAAP our presentation of been net effective SEC most billings, accordance EPS directly and also measures measures performance with rules. adjusted includes non-GAAP certain EBITDA, and of non-GAAP as financial the gross measures, including measures business. adjusted adjusted to have margin All supplemental

the yesterday. X-K earnings and in we charts information furnished reconciliation the find press release You'll important and Form SEC to other

the Dale Foster. turn Climb's CEO, now call to I'll over

good Thank morning, everyone. you, Sean, and

strategy. EBITDA as These core another produced in execution Our adjusted underscore billings, gross teams quarter net of results our income our and continued we increased team's year-over-year. QX adjusted great

delivering technology card to We by partners, our signing continue emerging existing and deepening on goals. organically with our new vendors to grow acquisition line relationships

As with often our to emphasized in a to line commitment most partner focused technology the have companies vendor us market. we innovative card enables the

quarter, and only During we X second the XX agreements new signed of with evaluated them. brands

briefly me a wins. highlight couple these Let of

we cloud to our IoT solution American partners. endpoint automation a management leading native partnership First, with Automox, North launched

With Climb provide save time, risk the with the control capabilities all patching customers Windows, addition platform. automate IT of endpoint one macOS configuration Linux Automox, can the and to of eliminate and modern and systems

a from assets, Next, ransomware, organizations organizations we that globally security Flashpoint, stakeholders includes physical finalized helps our risk threats. as infrastructure agreement and and cyber risks critical in most their with intelligence and attacks, leader trusted protect fraud

We way. the collaborate market, bring of are to mutually to building and products a these beneficial excited on their vendors relationship each with along

layered Wasabi's innovation We're in depth the the ensures further our offer to to surveillance that market Wasabi month, Wasabi addition a forward pleased organizations approach GSA exceed high-performance who to enables for storage. on data and protect video we in cost-effectively future. protected Cloud or require offer physical contract customers announced in-depth sector, security of requirements. elements adding and Surveillance low-cost, our with compliance our the Technologies, Last cloud. is in GSA cloud and meet footage public critical cloud partners approach to contract, of in secure protection. Climb delivers our to the will this hot Wasabi to look customers contract by data which data an also IT-XX expansion scale leader logical storage solution defense objective GSA

a and and North and and acquisition partners proven Last the DSS opportunities campus real exciting Adobe, expertise leader XXX team week, Go We're Climb, we Wisconsin-based both operations. to months. vendor unlocking distributor, synergies closed of some news. Incident to This education in XX stores services in more Guardian as including and North complementary across or new look and thrilled the the IT education American resellers into we markets. channel IQ. our than Adding DSS. DSS is cross-selling America Climb K-XX acquisition to to Douglas the family to brings in his and technology Software scale Hulan Now our coming value-added higher to and forward more XXX to provide than platforms welcome Chuck integrate Stewart

As the and plans at have Chuck team has the ERP months company announce Climb this excellent to our system. culture solidifies to go-to-market went that know built we created values stated strategies in will will competitiveness the platform our go-to-market and set of have system enhance similar us CTO, new particularly do here personally major pleased to before, represents and only platform. I our over the acquisitions his ability that past Vito by a to we drive market. this we and as I across team enhance thank market. an this the onboard to functions. XX better at and it's have a his efficiencies, Getting belief new phase month our reporting from across sales with Chuck This in live also significantly our Legrottaglie, entire as we other concept operations and providing our with in access that on core Climb. I am forward apart the our working would to our new the project real-time that operational improve data like decision-making finance, took operation step will global support The to growth system implementation continued and that

enable driving our ERP leverage operating us we the improving growth recent organic the half year, further while the implementation As enter of continue through foundation system. of back strong solid our to will

robust Drew be we selective service our the that amortization offset with only deliver acquisitions and inorganic platform. With As expense Drew? culture increased strategic we in our our a in XXXX initiatives Clark, through enable of objectives will call we and sheet CFO, and strong with beyond. With pipeline and patient associated goals. the M&A move turn as will through be on our not we The to ERP XXXX, aligned us organic these operating of financial but targets, planned go can our results. in offerings, solution synergies and balance that, anticipate I over will both bolster combination pursue growth and a to to will

everyone. Good Dale. morning, you, Thank

the provided comparisons financial While unless some our reminder excitements our for second year quick boring. quarter otherwise commentary and second and all for and specified. company refer we quarter team members, the our but quarter anything was review A it variance to prior as results

from the adjusted XXXX $XX.X increased from to the sales reflects in growth million out abbreviating organic contribution DataSolutions to year. the $XXX.X acquisition in our of $XX.X quarter XX% release, to data As of vendors recommendation our million versus as our reported compared million, suggested, gross to acquisition order At DSS. in we of our year in solutions any team will second compared well $XXX.X of correctly last billings of and who to existing a October AGB, to IR, million call quarter. recent earnings Net at in as XX% avoid press increased new or Elevate with which DS confusion ago

existing which organic acquisitions. efficiently strong deploy new shareholder prior million the million in by or AGB business the was or of DataSolutions, our Both the as quarter, as capital AGB our $X an year's in than on quarter for increased greater well DataSolutions $XX.X million XX.X% basis. approach quarter. So to indicators $XX.X generated XX.X% for excluding dual

and sales. of as reporting in security, and we increased million financial products, respective and metric growth the to under I AGB the business top in an for organic As quarter second Gross both and sales DataSolutions. influenced sales purposes America Again, compared net quarter, related true and calculation $XX.X a million. the from net to to from driven contribution are cost to from focus well new as existing of mix and growth AGB maintenance a our larger of XX% North as leads Dale convert cloud increase state, had sales line Europe we to sales. to to the vendors the and the DataSolutions AGB second profit or in GP adjustment by $XX.X which net was sale net adjustment recorded GAAP. In of therefore the frequently increase the generate higher on adjustment solutions product net to is as our of AGB by

for quarter, compared percentage a the increased Excluding million [ quarter. year's $X.X the as significant million for of GP DataSolutions, X.X% XX.X% DS a quarter. or the increase prior increased profit ] by to X%. to GP over generated in $X.X Gross AGB

quarter leverage statement. as expenses period SG&A side to second $XX.X the to $XX DataSolutions in year improve the addition business the in and the million. of compared increase same to will of percentage million global reflecting to Moving at million a of which X.X% ERP. the were DSS represented $X.X most operating for in compared the X.X% ago XXXX. of SG&A income expense with the period, AGB inherent model, our further in of the implementation decreased our

Net per in $X.XX for Adjusted effective or in and year compared than diluted million to existing the impacted period. The $X.X EBITDA to quarter. Adjusted primarily XX% the $X.XX FX quarter by XXX XX.X% XXXX Adjusted compared the in to per period. share a million negatively growth $X.X diluted quarter quarter comparable the to prior by of basis share share million XX.X% increased as XX% million $X.X company's or in driven per per XXXX second in The the or ago year-ago organic compared year for $X.XX second from the income XXXX. prior or income in to contribution in to earnings aforementioned million $X.X from share both $X.X Xx points increased profit as $X.XX $X.XX more to diluted the EBITDA the of to was increased million compared increase period. or second the increased new $X.X and well the margin period as share diluted to net per DataSolutions. percentage compared gross of were vendors diluted

of balance to primarily increased working period. $X.X cash well attributed balance Turning cash equivalents this as $XX.X Cash sheet. were receivable while to and XXXX, XX, as cash $XX.X and June million of million million XXXX, collections XX, compared payments. DataSolutions' in increase December the during as capital to by The timing on our was vendor

of with under $XX with million our As outstanding of debt no million XX, credit outstanding revolving we JPMorgan Chase. borrowings June XXXX, $X.X facility had

financing short-term utilized a invoice vehicle In DataSolutions terminated for discounting that addition, facility the capital. working as we

and with to quarterly to with As innovative while of XX, quarters, $X.XX new of plan adding declared Board XX record partners continue our shareholders earlier a card. vendors of we common August growth organic comments, XXXX. Building of dividend driving as stock our August prior to Dale's per share of of consistent existing on X, on payable Directors August line

another is approach our example of in M&A accretive and that also remain of as with. our capital stewards diligent direction. evaluate our earnings will be good targets to be we the DSS on fit to delivering we've entrusted We commitment strategic will been

XX EBITDA in press As $X.X trailing XX. million DSS noted release, for in months June ended our generated the

expand DSS' X in Our up to beyond. This growth with and deliver coupled expectation from We the top enable second line, and profitability our concludes in believe is months grow the XXXX participating liquidity will open expense it implement XXXX strong remarks. our call. to to of initiatives, you. to therefore, post-closing us those into and for robust Operator, X prepared back position questions the now synergies half operating We'll these EBITDA. first in

take from Colicchio with will We Instructions] [Operator Barrington question Research. Vincent first our

drivers sounds starting of core data Yes, it like and centers security off, the to continues growth. Dale, be

there? correct you First year? -- for is half expect I would of of the all, second that am And the expect what

our there -- of on it's we're premier center, then the very Vince. get as the You They delivering this quickly very really a it's but software security one side the on but from in just side of not hardware presenting from And focused. is there. different one, a some data because We've Vegas, the conference. event Black are came is there's which I just XX lag we're RSA yesterday but on. in hardware, the actually is growing places, our because vendors correct, quick. Hat some that

in Did your overall line broad-based? vendors growth top business? XX And was with grow the

across as regions growth. our Yes. of all as it saw We far

We our all every have And marketers teams our the except territories one. self-defined sell the in talk XXX territory, any direct that about. like and QX can that had SHI, products in we growth in for line we card DMRs, of CDW, and top in the the U.S. our

that, than that us. was way but think the I more other for flat, growth all

And long cross-selling it acquisition, then you think do on you how the take synergies should DSS generate here? before

so they to these sell And to, it will space. get quick. end we is Adobe advance have I Yes, targets way our talk where well internal, we strong higher at out. Adobe ed they're we And mean years we and Chuck -- in is thing great of you so pretty selling mean, when because But pretty one look -- didn't team. at and years that and we his and look in know be leave when for and and because have I really about did distributors, with it users. them own we both resellers K-XX data

So back that our we [ as like we call sell many space, selling out vertical, like don't we locations, unique products a locations already. went we does, that at looked to And EDUs it and something ]. even in were though XX,XXX DSS

So good. I think very the cross-selling is

that we with in distributors it that into they vendors they're more of storage the need like that that ecosystem. did cloud, have for their lot is we this And that The space. smaller and lot just and vendors, fit be them backup looking going we other a saying, the a of fit of acquire, to math our and hey, a are few quite in side cloud

quarter? cross-selling then you synergies in the DataSolutions achieve on And side, the did your

Yes, cross-selling the two things One is synergies. there.

of we of of between CDF, those aligned getting have the the Spinnakar, members with two we three, DataSolutions, And team have our business. now acquisition groups. different and side teams original our aspects it different running heads and other different The is both

and the U.K. tough So to integration then teams, what is all that thing vendors get of it's we're Irish the then finding to the market, is easy done. market. as to far the sign them to as in is expand And

of we're of can with. over have thing with that I So vendors them our we moved success seeing Same some over some three actually the then and two from that. U.S. moving or name have

of way But just will U.K. have U.S. back U.S. mentioned the most it's signed come an the to continue QX, were like from flow. be U.K. it actually or we I we've the had to signed in this And in that the So time, organic couple the a they after Ireland. that in

next question Dezellem Our Tieton will with from Capital. come Bill

mention, you discussions in been with for Dale, Douglas Did that months XX you've Stewart?

the the that of growth about we this are that out are first. many -- I of many was some to We're over Charles them was we and with X targets there Bill, there any XX and at prospects And Western of Most And talking looking out. vendors you as looked talked as months. excitement Europe same our organically XXX, vendors. that our the on out CMO, targets are I at acquisitions. that looked yesterday, was look And he's we continue last -- the quarter how I far Yes. see of have coming thing the and think, There at overseas. in is at. can the

into them, knew introduced got this and I to and great us education Douglas we we I a call tech don't we our life, do this consider out but one of When us. like They vertical chatting the the emerging verticals, space. But into in getting market. such is fit vertical Drew a that to, Stewart my the for is we past started closer and and really is am

that and they When we you for have a the products not a been cross them. build education we've but around while. say, a several But that's and go what lot products emerging tech into excitement we space. coverage industry the and they of is can sell quite actually talking yes, can well, emerging, of the Adobe really And that's, Adobe think like

tied you acquisition? would And the earnout please this with detail

that. jump Yes, I'll Drew on in let

target, earn-out is a elements. Bill. element around profit gross margin The primary the two Yes, structure

at the above a XXX% is achieve looked that also expected the earn-out [ forecast by to also We component gross component percentage earn-out. of can the growth get So they And there's and an DSS ] they then period to targets. we of generate, budget. XXX%, EBITDA increasing and if cash we that margin those during levels profit increased have a that -- target of EBIT a a of XX-month XX%, several

the earn-out dollar total be? that amount And that, what's could the What's maximum?

million, So you be believe. that max -- look the if target I $X.X about would at

the in the transaction. that to the Or on was ERP only? across Congratulations Relative geographies? was U.S. that all implementation,

talk a our on that, one. our great the this up. Drew the -- let is is launching is Drew. now, have second U.K. launch we're but to then in coming I'll there we done team have team one right Go ahead and [indiscernible] job other This

for callout the good again, And Dale. and team. Thanks, Vito Yes.

are just in very we North they So July Monday. went Vito went in U.K. -- on in well. Phil on who's Dale XX. CIO mentioned live America his team, Legrottaglie, and live It went from Vito -- the over Previously, our

X, will September August week of excuse November, live for and go selling are We obviously, their and strong then DSS. the me, July and then in we probably September Ireland, don't X. interrupt months -- DSS, first August strong very of And October, months

So platform. by we'll be on integrated an global November, completely

next will Investor. Our Howard Root, Private from come a question

congratulations an entire think, outstanding probably, on best results, congrats that. to the I but yet, this quarter, your yes, Two for you maybe team, acquisition like we'll and Dale, see and me. Climb just questions looks and the

acquisition. than basis? a business the on a billings the this, it overall little on and on First, is the kind same it global missed Is in business Is maybe kind same gross your existing I gross about the margins? or gross the -- -- margins and anything this different the of DSS an things adjusted of

have like we vendor have we that rebate They team. similar. paid. have little of funded vendors, than structures manager we a rebates similar our how heads rebates more ours, the have a so even It's have number but will some heads get limited funded bit show different They though vendors with very and have they because

kind focused, a climb look they're of said, space. nonprofit the in at if them, and micro like So you sled I K-XX they're and

and up do So people is do mindsets have go that team the already as market. some they vendors their we great same wow, pick as a we look same to of this that the with we lot members say, thing

paid before teams as will amalgamate what they'll over our to field have get on us right similar lifestyle them don't see bat, ] that the our you'll months. a representation stuff So And [ of have to X teams next was that products They and to lot add so They their take territory. here. market. some the they all off Climb

number gave line? million about EBITDA over is And adjusted little look me as it XX% the trailing bottom a at immediately the this Or of you going I XX% -- that about looks a months, maybe Is of accretive in do to a at your for terms in to around Is you Climb's. Okay. like percentage... little bit $X added in look it forward which XX way? how

they And in in Right, accretive right a of leading DataSolutions what doing. with see it's a the is They XX lean to the extremely Ireland, this off very you'll employees, immediately leading run QX. Adobe. similar and vendor results we're lean. bat, our to a But team, Citrix had

your this I number, your And it bottom XX% to increase is missing it a mean, I but just saying XX% on am -- increase a Or to adjusted something it EBITDA ballpark about there? with not addition? around is line, I'm

No, on. ahead. you're Go right

but which obstacle look your implementation congrats top the increase we a the quarter for mean of Okay. forward? last in more big as big coming with opportunity down looking adjusted line and any see don't growing bottom in increasing what added the look increase is to a had now leverage because admittedly, to easy without kind little anything means increase you, your Great. was a see gross -- so I year pretty early second still about a your far anything your so expenses of, as reducing mid-double-digit with line. Then I to a to the ask line congrats quarter, and future business. All wasn't other else great the the future talk give anything the than is want terms congrats, on XX% of ERP market but drops revenue that that it you not a right. at always else. I'm strong in I comp bit you've kind terms I my of products, billings, that's with question And growth maybe but pipeline, little bottom bottom and for bit specific and at really line hearing an guidance. do a just giving I linear you in better to in

And of large public Because sell we think we Yes. stuff. -- macro of some some and companies that talk maybe I very track they to to also jump let me are they're and both -- the are customers are of track overall put such competitors think in us And I they tracking large. they're sales. a don't and buckets, that to those people their to extremely because hardware seem we -- where our we some component have try

or you you when hardware. from still servers, laptops slowdown of COVID our continue was buying side. then that they have, issue the security, And that its buy people with but So see to and on leader is with logistics course, endpoint some

don't reported at So quarter. have trend after not of last looked -- followed that quarter, that we of some have And the quarter, we after week. this companies we

and ebb vendor would challenges it's with some with that vendors really underperform performance, So with Climb, flow We were Sophos. if the down some like had at and their have they at we A look ERP. Sophos large QX you right? of

it's some a I market typically not always teams here's reasons a portfolio And tell but is investor of broad that lot my and there's we that I'll enough kind community, thing. and have -- for of we what cycles. sales it, our a have and So tell

start discipline, one in other. looking the So we'll if we're at not selling

are profit. gross on compensated Our teams highly

not in get dollars, we're they if paid. don't bringing So

level us, fine-tuning us The that into. aggressive worked thing putting new or vendors the has just looking of that vendors to we've, we Howard. model a keep and Elevate our model our small many market high they're under we're at at other spend team, So the still that as are sell is not cycles so way. for And sales model. But that And the don't extremely we'll energy. we performing

of So and about And keep the we continually. side both it here. changes the the, like vendor before, hey, we make as as, we acquisition it, ear then have far And side. I ground can need to just We do talk our change said sides right, we the of rapidly. some

Great. been the congrats, Thanks results a great quarter for on explanation. and and I the up have impressive. work. Congrats mean keep great the

session. to And I this remarks. Dale our the will conclude turn would now question-and-answer for Foster like call back to closing Mr.

division they not is was in IT have Thank it matter Drew complete you, about been we that we be call operator. implemented closing, talked to to in of lot put team mess. of our Thank year. But the in, time that I when In hours shareholders. it extra team. organization couple want only make And client we SMEs has each wow, ago, of or ERP, I by launch. finally experts will a hear people you of a the this the our end they it. to implement all through a to a think, amount those all thank subject entire this but and like our -- It's said, going put have successful be years sure we'll know also ERP and what

a very that has and team made and amount of mess, running. we minimal off are Our

close first system. we'll July on So out is new time our the

joined. everybody who Thank appreciate I So you. with that,

and conclude Ladies will teleconference. now this disconnect. gentlemen, may today's you And