Net Sales Grew 4% to a First Quarter Record
$542.8 MillionGross Profit Margin Improves 40 Basis Points
to a Record 15.4%Sales of Services Increased 22% to $45
Million
PCM, Inc. (NASDAQ: PCMI), a leading technology solutions
provider, today reported financial results for the first quarter of
2018.
First Quarter Consolidated Financial
Summary
Three Months Ended March 31,
(in millions, except per share data)
2018
2017
%
Change
Net Sales $ 542.8 $ 522.8 4 Gross Profit 83.6 78.5 6 Gross Profit
Margin 15.4% 15.0% 40bp Consolidated SG&A $ 77.4 $ 73.8 5
Operating Profit 6.2 4.7 32 Net Income 2.8 4.2 (33) Non-GAAP Net
Income 4.2 3.6 15 EBITDA 10.0 8.4 20 Adjusted EBITDA 11.0
9.7 14 Diluted Earnings per Share 0.23 0.31 (26) Adjusted
Diluted Earnings per Share 0.34 0.27 26
Frank Khulusi, Chairman and CEO of PCM, Inc., stated, “This is a
strong start to the year, with record first quarter revenues, gross
margin and operating profit achieved through increased performance
in the areas of our business where we have made significant
investments and aligned our resources. The success of our strategy
is evidenced by the 22% increase in services sales, improving our
services mix to over 8% of net sales, which helped drive the gross
margin gains in the quarter. Our new UK business also delivered
strong performance and achieved near break-even results less than
one year after its launch. All of these accomplishments, combined
with restrained spending drove significant improvement in our
operating profit. We continue to execute on our strategies to
increase contributions from our higher value-added services and
solutions and expand our international presence.”
Commenting on PCM’s outlook, Mr. Khulusi concluded, “We are
tracking to a record year in sales, gross profit and adjusted EPS
for 2018, as we begin reaping the benefits of our 2017 investments
in security, cloud, hybrid data center and managed services. We are
reiterating our 2018 guidance for non-GAAP earnings per share to be
in a range of $2.00 - $2.10 per share, including the results of our
UK segment, which we anticipate being profitable for the full year
of 2018. Giving effect to the new revenue standard, which is being
reflected in our guidance for the first time, and that some of our
highest growing areas of the business such as security are now
reported on a net basis, we expect our full year 2018 growth will
be approximately 4%. We are also raising our gross margin guidance
from approximately 15% to a range of 15.0% - 15.5% for the full
year. Further, given the seasonality of our state, local and
educational component of our public sector business, and given the
historic strength of netted down revenue in the second quarter,
among other factors, we expect revenue growth in the third and
fourth quarter to exceed that of the second quarter.”
New Accounting Standard
In May 2014, the FASB issued ASU 2014-09, “Revenue from
Contracts with Customers (Topic 606),” which, along with amendments
issued in 2015 and 2016, replaced most existing revenue recognition
guidance under GAAP and eliminate industry specific guidance. The
core principle of the new guidance is that an entity should
recognize revenue for the transfer of goods and services equal to
an amount it expects to be entitled to receive for those goods and
services. We adopted the guidance on January 1, 2018 using the full
retrospective method, which resulted in adjustments to our
consolidated statement of operations and consolidated statement of
cash flows for the three months ended March 31, 2017 presented
herein.
First Quarter Segment Sales
Summary
Three Months
Ended March 31,
2018
2017
(in thousands)
Net Sales Percentage
ofTotal Net Sales Net
Sales Percentage ofTotal Net
Sales Dollar Change
PercentChange Commercial $ 414,731 76 %
$ 407,520 78 % $ 7,211 2 % Public Sector 56,062 10 66,606 13
(10,544 ) (16 ) Canada 54,120 10 48,660 9 5,460 11 United Kingdom
18,073 3 — — 18,073 NM (1 ) Corporate & Other (154 ) — (26 ) —
(128 ) NM (1 ) Consolidated $ 542,832 100
%(2)
$ 522,760 100 % $ 20,072 4 %
(1) Not meaningful.(2) Does not foot due to rounding.
Results of Operations
Net Sales
Consolidated net sales were $542.8 million in the three months
ended March 31, 2018 compared to $522.8 million in the three months
ended March 31, 2017, an increase of $20.0 million or 4%.
Consolidated sales of services were $45.0 million in the three
months ended March 31, 2018 compared to $36.8 million in the three
months ended March 31, 2017, an increase of $8.2 million, or 22%,
and represented 8% and 7% of consolidated net sales in the three
months ended March 31, 2018 and 2017, respectively. Consolidated
net sales growth primarily resulted from an $18.1 million increase
in sales made in our new United Kingdom segment, but was negatively
impacted by an $18.0 million increase in sales reported on a net
basis.
Commercial net sales were $414.7 million in the three months
ended March 31, 2018 compared to $407.5 million in the three months
ended March 31, 2017, an increase of $7.2 million or 2%. Sales of
services in our Commercial segment were $33.0 million in the three
months ended March 31, 2018 compared to $27.2 million in the three
months ended March 31, 2017, an increase of $5.8 million or 21%,
and represented 8% and 7% of Commercial net sales in the three
months ended March 31, 2018 and 2017, respectively. Net sales
growth in our Commercial segment was impacted by a $6.1 million
increase in sales reported on a net basis.
Public Sector net sales were $56.1 million in the three months
ended March 31, 2018 compared to $66.6 million in the three months
ended March 31, 2017, a decrease of $10.5 million or 16%, primarily
due to a $9.8 million increase in sales reported on a net basis.
Our federal sales decreased by 20%, while our state and local
government and educational institution (“SLED”) sales decreased by
15%. Sales of services in our Public Sector segment were $3.1
million in the three months ended March 31, 2018 compared to $2.2
million in the three months ended March 31, 2017, an increase of
$0.9 million or 45%, and represented 6% and 3% of Public Sector net
sales in the three months ended March 31, 2018 and 2017,
respectively. Our federal business net sales were negatively
impacted in the quarter by the loss of a Federal contract, which we
were unwilling to rebid at a loss as we stated last quarter. Our
SLED business was negatively impacted by a $9.3 million increase in
sales reported on a net basis, partially offset by a $1.4 million
increase in sales of services.
Canada net sales were $54.1 million in the three months ended
March 31, 2018 compared to $48.7 million in the three months ended
March 31, 2017, an increase of $5.4 million, or 11%, despite a $1.4
million increase in sales reported on a net basis. Sales of
services in our Canadian segment were $7.5 million in each of the
three months ended March 31, 2018 and 2017, and represented 14% and
15% of Canada net sales in the three months ended March 31, 2018
and 2017, respectively.
Our United Kingdom segment, which officially launched in the
second quarter of 2017, generated net sales of $18.1 million in the
three months ended March 31, 2018.
Gross Profit and Gross Profit Margin
Consolidated gross profit was $83.6 million in the three months
ended March 31, 2018 compared to $78.5 million in the three months
ended March 31, 2017, an increase of $5.1 million, or 6%.
Consolidated gross profit margin increased to 15.4% in the three
months ended March 31, 2018 from 15.0% in the same period last
year. The increase in consolidated gross profit was primarily due
to the increase in net sales, partially offset by a $2.5 million
decrease in vendor consideration. The increase in consolidated
gross profit margin was primarily due to an $18.0 million increase
in sales reported on a net basis and an increase in selling margins
driven by a higher mix of services and solutions, partially offset
by a reduction in vendor consideration received as a percentage of
net sales.
Selling, General & Administrative Expenses
Consolidated SG&A expenses were $77.4 million in the three
months ended March 31, 2018 compared to $73.8 million in the three
months ended March 31, 2017, an increase of $3.6 million or 5%.
Consolidated SG&A expenses as a percentage of net sales
increased slightly to 14.3% in the three months ended March 31,
2018 from 14.1% in the same period last year. The increase in
consolidated SG&A expenses was primarily related to a $4.6
million increase in personnel costs, of which $3.1 million related
to our new United Kingdom segment, which was launched in the second
quarter of 2017. The increase in consolidated SG&A expenses was
also impacted by a $0.6 million increase in lease expenses
partially offset by a $1.6 million decrease in outside service
costs primarily related to the termination of the Pakistani BPO
service contract and a $0.6 million decrease in travel and
entertainment expenses.
Operating Profit
Consolidated operating profit increased 32% to $6.2 million
compared to $4.7 million in the prior year, for the reasons
discussed above.
Income Taxes
Income tax expense was $1.1 million in the three months ended
March 31, 2018 compared to income tax benefit of $1.0 million in
the three months ended March 31, 2017. Our effective tax rate was
28.9% compared to (36.1)% in the prior year. Income taxes in the
three months ended March 31, 2018 reflected the new lower Federal
income tax rate and other factors within tax reform, compared to
income taxes in the three months ended March 31, 2017 benefiting
from a credit to income tax expense of $2.3 million related to the
excess tax benefits associated with the exercise of stock
options.
Net Income
Net income for the three months ended March 31, 2018 was $2.8
million compared to $4.2 million for the three months ended March
31, 2017. Diluted earnings per share was $0.23 compared to $0.31 in
the prior year.
Adjusted EPS
Non-GAAP EPS (adjusted EPS) was $0.34 for the three months ended
March 31, 2018 compared to $0.27 in the three months ended March
31, 2017.
Consolidated Balance Sheet and Cash Flow
We had cash and cash equivalents of $12.2 million at March 31,
2018 compared to $9.1 million at December 31, 2017. We had $39.5
million of net cash provided by operating activities during the
three months ended March 31, 2018 compared to $13.5 million of net
cash used in operating activities in the three months ended March
31, 2017.
Accounts receivable at March 31, 2018 was $440.7 million, an
increase of $1.0 million from December 31, 2017. Inventory at
March 31, 2018 was $75.5 million, a decrease of $28.0 million from
December 31, 2017, primarily related to certain purchases made
in the fourth quarter of 2017 which have largely been sold in the
first quarter of 2018. Accounts payable at March 31, 2018 was
$288.2 million, a decrease of $1.0 million from December 31,
2017.
Cash used in investing activities during the three months ended
March 31, 2018 totaled $1.5 million compared to $6.0 million during
the three months ended March 31, 2017. Investing activities for the
three months ended March 31, 2018 were primarily related to
expenditures relating to investments in our IT infrastructure.
Investing activities for the three months ended March 31, 2017 were
primarily related to a purchase of real property in Woodridge,
Illinois for $3.1 million, expenditures relating to investments in
our IT infrastructure, and leasehold improvements.
Within cash flows from financing activities, we paid earnout
payments of $1.7 million in the three months ended March 31, 2018,
compared to $2.8 million in the three months ended March 31, 2017.
The earnout payment in 2018 relates to December 2017, and any
remaining required earnout payments are scheduled to be paid in the
second quarter of 2018.
Our outstanding borrowings under our line of credit was $184.7
million at March 31, 2018, a $29.1 million decline compared to
$213.8 million at December 31, 2017.
Sales Mix
The following table sets forth our gross billed sales (net of
returns) by major categories as a percentage of total gross billed
sales (net of returns) for the periods presented, determined based
upon our internal product code classifications:
Three Months EndedMarch 31,
Y/YSales
2018
2017
Growth
Software (1)
25 % 24 % 14 % Notebooks and tablets 17 21 (12 ) Networking 9 8 23
Desktops 9 8 13 Delivered services 8 7 22 Display 5 5 11
Manufacturer service and warranties
(1)
5 6 (14 )
Servers
3 2 15 Accessories 3 3 4 Storage 3 4 (5 ) Printers 2 3 (8 )
Other (2)
11 9 12 Total 100 % 100 %
_________________________
(1) Software, including software licenses, maintenance and
enterprise agreements, and manufacturer service and warranties are
shown, for purposes of this table, on a gross sales billed to
customers basis, net of returns and do not reflect the net down
impact related to revenue recognition for sales of such products.
(2) Other includes power, input devices, supplies, consumer
electronics, memory, iPod/MP3 and miscellaneous other items.
Adjustments Relating to the New Revenue
Recognition Standard
The adoption of ASU 2014-09 impacts our financial results as
follows for the periods presented below (some items may not foot
across due to rounding, in thousands, except per share
amounts):
Three Months Ended March 31, 2017
Three Months Ended June 30, 2017 Three
Months Ended September 30, 2017 Three Months
Ended December 31, 2017 As Reported
New Revenue Recognition Standard Adjustment
As Adjusted As
Reported New Revenue Recognition Standard
Adjustment As Adjusted
As Reported New Revenue Recognition
Standard Adjustment As
Adjusted As Reported New
Revenue Recognition Standard Adjustment
As Adjusted Net sales $ 524,399 $ (1,639
) $ 522,760 $ 560,110 $ (4,028 ) $ 556,082 $ 545,479 $ (2,204 ) $
543,275 $ 563,448 $ (18,678 ) $ 544,770 Gross profit 78,205 293
78,498 85,371 (226 ) 85,145 81,294 163 81,457 80,852 (1,224 )
79,628 Gross profit margin 14.9 % 10 bps 15.0 % 15.2 % 7 bps 15.3 %
14.9 % 9 bps 15.0 % 14.3 % 27 bps 14.6 % Operating profit
(loss) 4,473 238 4,711 5,624 (220 ) 5,404 1,385 121 1,506 (41 )
(952 ) (993 ) Income tax expense (benefit) (1,069 ) 93 (976
) 1,273 (86 ) 1,187 427 47 474 353 (371 ) (18 ) Net income
(loss) 4,027 145 4,172 2,500 (134 ) 2,366 (841 ) 74 (767 ) (2,595 )
(581 ) (3,176 ) Earnings (Loss) Per Share: Basic 0.33 0.01
0.34 0.20 (0.01 ) 0.19 (0.07 ) 0.01 (0.06 ) (0.22 ) (0.05 ) (0.27 )
Diluted 0.30 0.01 0.31 0.19 (0.01 ) 0.18 (0.07 ) 0.01 (0.06 ) (0.22
) (0.05 ) (0.27 )
At March 31, 2017 At June
30, 2017 At September 30, 2017 As
Reported New Revenue Recognition Standard
Adjustment As Adjusted
As Reported New Revenue Recognition Standard
Adjustment As Adjusted
As Reported New Revenue Recognition Standard
Adjustment As Adjusted
Accounts receivable $ 354,301 $ 12,618 $ 366,919 $ 442,460 $ 12,269
$ 454,729 $ 412,733 $ 14,497 $ 427,230 Inventory 66,417 (11,331 )
55,086 77,439 (11,208 ) 66,231 74,871 (13,273 ) 61,598 Total
current assets 446,602 1,287 447,889 541,735 1,061 542,796 506,011
1,224 507,235 Total assets 611,045 1,287 612,332 710,041 1,061
711,102 678,537 1,224 679,761 Accounts payable 241,470 236
241,706 355,834 229 356,063 271,841 271 272,112 Total current
liabilities 447,006 236 447,242 536,910 229 537,139 506,050 271
506,321 Deferred income tax liability 1,556 410 1,966 3,758
324 4,082 3,819 371 4,190 Total liabilities 473,698 646 474,344
569,386 554 569,940 548,548 643 549,191 Retained Earnings
32,184 641 32,825 34,778 507 35,285 33,843 581 34,424 Total
stockholders' equity 137,347 641 137,988 140,655 507 141,162
129,989 581 130,570 Total liabilities and stockholders' equity
611,045 1,287 612,332 710,041 1,061 711,102 678,537 1,224 679,761
Year Ended December 31, 2017
Year Ended December 31, 2016 As Reported
New Revenue Recognition Standard
Adjustment As Adjusted
As Reported New Revenue Recognition
Standard Adjustment As
Adjusted Net sales $ 2,193,436 $ (26,549 ) $
2,166,887 $ 2,250,587 $ (11,030 ) $ 2,239,557 Gross profit 325,722
(994 ) 324,728 318,801 126 318,927 Gross profit margin 14.8 % 14
bps 15.0 % 14.2 % 8 bps 14.2 % Operating profit 11,441 (813
) 10,628 34,791 110 34,901 Income tax expense 984 (317 ) 667
11,115 43 11,158 Net income 3,091 (496 ) 2,595 17,593 67
17,660 Earnings Per Share: Basic 0.25 (0.04 ) 0.21 1.49 0.01
1.49 Diluted 0.24 (0.04 ) 0.20 1.40 0.01 1.41
At
December 31, 2017 At December 31, 2016 As
Reported New Revenue Recognition Standard
Adjustment As Adjusted
As Reported New Revenue Recognition Standard
Adjustment As Adjusted
Accounts receivable $ 439,658 $ - $ 439,658 $ 358,949 $ 9,647 $
368,596 Inventory 103,471 - 103,471 80,872 (8,653 ) 72,219 Total
current assets 561,575 - 561,575 469,055 994 470,049 Total assets
740,252 - 740,252 629,810 994 630,804 Accounts payable
289,201 - 289,201 276,524 180 276,704 Total current liabilities
569,294 - 569,294 474,052 180 474,232 Deferred income tax
liability 3,102 - 3,102 1,498 317 1,815 Total liabilities 612,626 -
612,626 501,339 498 501,837 Retained Earnings 31,248 -
31,248 28,251 496 28,747 Total stockholders' equity 127,626 -
127,626 128,471 496 128,967 Total liabilities and stockholders'
equity 740,252 - 740,252 629,810 994 630,804
Non-GAAP Measures
We are presenting earnings before interest, taxes, depreciation
and amortization expenses (EBITDA), adjusted EBITDA and non-GAAP
EPS (adjusted EPS), which are financial measures that are not
determined in accordance with accounting principles generally
accepted in the United States of America, or GAAP. Adjusted EBITDA
and adjusted EPS remove the effect of severance and restructuring
related expenses related to our cost reduction initiatives and
stock-based compensation, as well as uncommon, non-recurring or
special items. Adjusted EPS also removes the effect of amortization
of intangibles acquired in acquisitions. Depreciation and
amortization expenses primarily represent an allocation to current
expense of the cost of historical capital expenditures and for
acquired intangible assets resulting from prior business
acquisitions. EBITDA, adjusted EBITDA and adjusted EPS should be
used in conjunction with other GAAP financial measures and are not
presented as an alternative measure of operating results, as
determined in accordance with GAAP. We believe that these non-GAAP
financial measures allow a more meaningful comparison of our
operating performance trends to both management and investors that
is more indicative of our consolidated operating results across
reporting periods. We believe that adjusted EBITDA and adjusted EPS
provide a better understanding of our company’s operating
performance and cash flows. A reconciliation of the non-GAAP
consolidated financial measures is included in a table below.
Conference Call
Management will hold a conference call, which will be webcast,
on April 25, 2018 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific
Time) to discuss its first quarter results. To listen to PCM
management’s discussion of its first quarter results live, access
http://investor.pcm.com/events-presentations.
The archived webcast can be accessed at http://investor.pcm.com
under “Events & Presentations.” A replay of the conference
call by phone will be available from 7:30 p.m. ET on April 25,
2018 until May 2, 2018 and can be accessed by calling (855)
859-2056 (International (404) 537-3406) and inputting code
8757936.
About PCM, Inc.
PCM, Inc., through its wholly-owned subsidiaries, is a leading
multi-vendor provider of technology solutions, including hardware,
software and services to small, medium and enterprise businesses,
state, local and federal governments and educational institutions
across the United States, Canada and the UK. We generated net sales
of $2.2 billion in the twelve months ended March 31, 2018. For more
information, please visit investor.pcm.com or call (310)
354-5600.
Forward-looking
Statements
This press release may contain 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. Such forward-looking statements include
statements regarding our expectations, hopes or intentions
regarding the future, including but not limited to, statements
related to our strategic positioning; our positioning for future
growth; expectation of financial performance, opportunities,
expectations or intentions for growth in top or bottom line
operating results; expectations for gross margins; expectations of
reaping the benefits of our 2017 investments in security, cloud,
hybrid data center and managed services; expectations for
profitability for the full year of 2018; expectations for the full
year 2018 growth; expectations for revenue growth in the third and
fourth quarter to exceed that of the second quarter; expectations
of earnings per share. Forward-looking statements involve certain
risks and uncertainties, and actual results may differ materially
from those discussed in any such statement. Factors that could
cause our actual results to differ materially include without
limitation risks and uncertainties related to the following: our
ability to attract and retain key employees; our ability to receive
expected returns on changes in our sales and services organizations
or strategic investments, including without limit, investments in
advanced technology solutions and services, our call centers and
our international expansion; risks associated with our ability to
integrate our acquisitions; availability of key vendor incentives
and other vendor assistance; our IT infrastructure; risks
associated with cyber and data security including compliance with
related regulatory requirements such as the European Union General
Data Protection Regulation, which will apply to our operations
beginning in May of 2018; the relationship between the number of
our account executives and productivity; decreased sales related to
any of our segments, including but not limited to, potential
decreases in sales resulting from the loss of or a reduction in
purchases from significant customers; the effect of any failure by
us to continue to successfully transition outsourced BPO services
historically provided to our En Pointe business under a service
agreement we acquired in connection with our En Pointe acquisition;
possible discontinuance of IT licenses used to operate our business
which are provided by vendors; increased competition, including,
but not limited to, increased competition from direct sales by some
of our largest vendors and increased pricing pressures which affect
our pricing strategy in any given period; the misappropriation or
unauthorized use of our proprietary or confidential information by
competitors or others; our loss of personnel to competitors; the
effect of our pricing strategy on our operating results; potential
decreases in sales related to changes in our vendors products; the
potential lack of availability of government funding applicable to
our Public Sector business; the impact of seasonality on our sales;
availability of products from third party suppliers at reasonable
prices; business and other conditions in Canada, the UK and
Europe and the Asia Pacific region and the related effects on
our Canadian, UK and our Asia-Pacific operations, including without
limitation our executive management’s lack of experience operating
in some of these markets; increased expenses, including, but not
limited to, interest expense, foreign currency transaction
gains/losses and other expenses which may increase as a result of
future inflationary pressures; our advertising, marketing and
promotional efforts may be costly and may not achieve desired
results; shifts in market demand or price erosion of owned
inventory; other risks related to foreign currency
fluctuations; warranties and indemnities we may be required to
provide to third parties through our commercial contracts;
litigation by or against us, including without limitation the
litigation and other actions related to our En Pointe acquisition;
and availability of financing, including availability under our
existing credit lines. Additional factors that could cause our
actual results to differ are discussed under the heading “Risk
Factors” in Item 1A, Part I of our Form 10-K for the year
ended December 31, 2017, on file with the Securities and Exchange
Commission, and in our other reports filed from time to time with
the SEC. All forward-looking statements in this document are made
as of the date hereof, based on information available to us as of
the date hereof, and we assume no obligation to update any
forward-looking statements.
PCM, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited, in thousands, except per share
amounts) Three Months EndedMarch 31,
2018 2017 Net sales $ 542,832 $ 522,760 Cost
of goods sold 459,236 444,262 Gross profit 83,596 78,498 Selling,
general and administrative expenses 77,354 73,787 Operating profit
6,242 4,711 Interest expense, net 2,462 1,653 Equity income from
unconsolidated affiliate 175 138 Income before income taxes 3,955
3,196 Income tax expense (benefit) 1,144 (976 ) Net income $ 2,811
$ 4,172
Basic and Diluted Earnings Per Common Share
Basic $ 0.24 $ 0.34 Diluted 0.23 0.31 Weighted average
number of common shares outstanding: Basic 11,846 12,356 Diluted
12,153 13,452
PCM, INC. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (unaudited, in thousands, except
per share amounts) Three Months Ended
March 31,
2018 2017 EBITDA(a): Consolidated operating
profit $ 6,242 $ 4,711 Add: Consolidated depreciation expense 2,713
2,440 Consolidated amortization expense 892 1,082 Equity income
from unconsolidated affiliate(b) 175 138
EBITDA $ 10,022 $
8,371
EBITDA Adjustments: Stock-based compensation $
672 $ 515 M&A and related litigation costs and fees (c) 240 170
Severance & restructuring related costs (d) 312 615 Foreign
exchange (gain) loss (230 ) 25
Total EBITDA adjustments $
994 $ 1,325
Adjusted EBITDA: EBITDA $ 10,022 $ 8,371
Add: EBITDA Adjustments 994 1,325
Adjusted EBITDA $ 11,016 $
9,696
Net income: Income before income taxes $ 3,955
$ 3,196 Less: Income tax expense (benefit) 1,144 (976 )
Net
income $ 2,811 $ 4,172 Income before income taxes $
3,955 $ 3,196 Add: EBITDA Adjustments 994 1,325 Amortization of
purchased intangibles (e) 888 1,078 Adjusted income before income
taxes 5,837 5,599 Less: Adjusted income tax expense (f) 1,687 1,993
Non-GAAP net income $ 4,150 $ 3,606
Diluted
earnings per share: GAAP diluted EPS $ 0.23 $ 0.31 Non-GAAP
diluted EPS 0.34 0.27 Diluted weighted average number of
common shares outstanding 12,153 13,452 (a) EBITDA —
earnings from continuing operations before interest, taxes,
depreciation and amortization. (b) Represents our equity income
resulting from our 49% ownership interest in the NCE. (c) Includes
costs and fees, including litigation, related to our acquisitions.
(d) Includes employee severance related costs related to our cost
reduction initiatives, lease vacancy costs and other restructuring
related costs. (e) Includes amortization expense for
acquisition-related intangible assets, which include trademarks,
trade names, non-compete agreements and customer relationships. (f)
The 2018 tax expense is based on our first quarter effective tax
rate of 28.9%, which approximates our estimated effective tax rate
for the full year of 2018. The 2017 tax expense assumes an
estimated annual effective tax rate of 35.6%. Our actual effective
tax rate for the three months ended March 31, 2017 was (36.1)% due
to the effect of discrete tax benefits in the quarter.
PCM, INC.
CONSOLIDATED BALANCE SHEETS (unaudited, in thousands,
except per share amounts and share data) March
31, December 31, 2018 2017
ASSETS Current assets: Cash and cash equivalents $ 12,225 $
9,113 Accounts receivable, net of allowances of $1,449 and $2,181
440,683 439,658 Inventories 75,469 103,471 Prepaid expenses and
other current assets 8,488 9,333 Total current assets 536,865
561,575 Property and equipment, net 70,733 71,551 Goodwill 87,823
87,768 Intangible assets, net 10,158 11,090 Deferred income taxes
1,702 1,759 Investment and other assets 4,960 6,509 Total assets $
712,241 $ 740,252
LIABILITIES AND STOCKHOLDERS’
EQUITY Current liabilities: Accounts payable $ 288,164 $
289,201 Accrued expenses and other current liabilities 55,465
55,040 Deferred revenue 6,625 7,913 Line of credit 184,693 213,778
Notes payable — current 3,462 3,362 Note payable related to asset
held for sale — — Total current liabilities 538,409 569,294 Notes
payable 31,984 32,892 Other long-term liabilities 7,495 7,338
Deferred income taxes 3,279 3,102 Total liabilities 581,167 612,626
Commitments and contingencies Stockholders’ equity: Preferred
stock, $0.001 par value; 5,000,000 shares authorized; none issued
and outstanding — — Common stock, $0.001 par value; 30,000,000
shares authorized; 17,220,896 and 17,170,273 shares issued;
11,830,244 and 11,779,621 shares outstanding 17
17
Additional paid-in capital 135,539 134,646 Treasury stock, at cost:
5,390,652 shares (38,536 ) (38,536 ) Accumulated other
comprehensive income (5 ) 251 Retained earnings 34,059 31,248 Total
stockholders’ equity 131,074 127,626 Total liabilities and
stockholders’ equity $ 712,241 $ 740,252
PCM,
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands) Three Months
endedMarch 31, 2018 2017 Cash Flows
From Operating Activities Net income $ 2,811 $ 4,172
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 3,605 3,522
Equity income from unconsolidated affiliate (175 ) (138 )
Distribution from equity method investee 78 — Provision for
deferred income taxes 226 (294 ) Non-cash stock-based compensation
672 515 Change in operating assets and liabilities: Accounts
receivable (1,025 ) 1,677 Inventories 28,002 17,133 Prepaid
expenses and other current assets 845 3,967 Other assets 1,718 (367
) Accounts payable 1,881 (38,648 ) Accrued expenses and other
current liabilities 2,121 783 Deferred revenue (1,288 ) (5,846 )
Total adjustments 36,660 (17,696 ) Net cash provided by (used in)
operating activities 39,471 (13,524 )
Cash Flows From Investing
Activities Purchases of property and equipment (1,479 ) (6,033
) Net cash used in investing activities (1,479 ) (6,033 )
Cash
Flows From Financing Activities Net borrowings (payments) under
line of credit (29,085 ) 13,238 Borrowing under note payable —
3,139 Payments under notes payable (819 ) (1,261 ) Change in book
overdraft (2,974 ) 3,648 Payments of earn-out liability (1,736 )
(2,813 ) Payments of obligations under capital lease (221 ) (521 )
Proceeds from capital lease obligations — 587 Proceeds from stock
issued under stock option plans 251 4,428 Payment for deferred
financing costs (27 ) (597 ) Payment of taxes related to
net-settled stock awards (28 ) (81 ) Net cash provided by (used in)
financing activities (34,639 ) 19,767 Effect of foreign currency on
cash flow (241 ) 389 Net change in cash and cash equivalents 3,112
599 Cash and cash equivalents at beginning of the period 9,113
7,172 Cash and cash equivalents at end of the period $ 12,225 $
7,771
Supplemental Cash Flow Information Interest paid $
2,285 $ 1,341 Income taxes paid, net 1,134 2,346
Supplemental
Non-Cash Investing and Financing Activities Financed and
accrued purchases of property and equipment 421 44
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180425006646/en/
Investor Relations:Hayden IRKim Rogers(385)
831-7337kim@haydenir.com
PCM (NASDAQ:PCMI)
Historical Stock Chart
From Jun 2024 to Jul 2024
PCM (NASDAQ:PCMI)
Historical Stock Chart
From Jul 2023 to Jul 2024