Climb Global Solutions Reports Record Third Quarter 2024 Results
Net Income and Adjusted Net Income up more than 2x to $5.5 Million or $1.19 per Share and $7.1 million or $1.55 per share, respectively; Adjusted EBITDA up 96% to $9.9 Million
Net Sales up 52% to $119.3 Million, with Adjusted Gross Billings Up 65% to $465.2 Million
EATONTOWN, N.J., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Climb Global Solutions, Inc. (NASDAQ:CLMB) ("Climb", the "Company", "we", or "our"), a value-added global IT channel company providing unique sales and distribution solutions for innovative technology vendors, is reporting results for the third quarter ended September 30, 2024.
Third Quarter 2024 Summary vs. Same Year-Ago Quarter
Net sales increased 52% to $119.3 million.
Adjusted gross billings (a non-GAAP financial measure defined below) increased 65% to $465.2 million.
Net income increased more than 2x to $5.5 million or $1.19 per diluted share.
Adjusted net income (a non-GAAP financial measure defined below) also increased more than 2x to $7.1 million or $1.55 per diluted share.
Adjusted EBITDA (a non-GAAP financial measure defined below) increased 96% to $9.9 million.
Management Commentary
"Q3 was another period of exceptional growth for Climb as we generated record levels across all key financial metrics, while delivering on our acquisition objectives," said CEO Dale Foster. "Our strong performance was driven by the execution of our core initiatives and the integration of DSS and DataSolutions into our operating platform. We also generated double-digit organic growth in both the U.S. and Europe as we deepened relationships with existing customers while signing new, innovative vendors to our line card.
"Looking ahead, we will continue to leverage our global infrastructure to foster organic growth while actively evaluating M&A targets that complement our geographic footprint, expand our service and solution offerings and, most importantly, align with our high-performance culture. We expect to unlock additional synergies from our acquisitions and further improve operating leverage as we execute across our global platform. We believe that these initiatives, coupled with our proven track record of accretive M&A, will enable us to close out 2024 on a strong note and achieve another year of record results."
Dividend
Subsequent to quarter end, on October 28, 2024, Climb's Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable on November 15, 2024, to shareholders of record on November 11, 2024.
Third Quarter 2024 Financial Results
Net sales in the third quarter of 2024 increased 52% to $119.3 million compared to $78.5 million for the same period in 2023. This reflects organic growth from new and existing vendors, as well as contributions from the Company's acquisitions of Douglas Stewart Software & Services, LLC ("DSS") on July 31, 2024 and DataSolutions Holdings Limited ("DataSolutions") on October 6, 2023. In addition, adjusted gross billings ("AGB") in the third quarter of 2024 increased 65% to $465.2 million compared to $281.9 million in the year-ago period.
Gross profit in the third quarter of 2024 increased 70% to $24.3 million compared to $14.3 million for the same period in 2023. The increase was driven by organic growth from new and existing vendors in both North America and Europe, as well as contributions from DSS and DataSolutions.
Selling, general, and administrative ("SG&A") expenses in the third quarter of 2024 were $13.9 million compared to $10.1 million in the year-ago period. SG&A from DSS and DataSolutions drove the majority of the increase as well as variable sales compensation attributed to the growth in AGB. SG&A as a percentage of adjusted gross billings decreased to 3.0% for the third quarter of 2024 compared to 3.6% in the year-ago period.
Net income in the third quarter of 2024 increased more than 2x to $5.5 million or $1.19 per diluted share, compared to $2.4 million or $0.52 per diluted share for the same period in 2023. Net income was impacted by a $1.2 million charge related to a change in fair value of acquisition contingent consideration associated with DataSolutions. Adjusted net income also increased more than 2x to $7.1 million or $1.55 per diluted share, compared to $2.6 million or $0.56 per diluted share for the year-ago period. The Company's earnings per diluted share in the third quarter of 2024 was negatively impacted by $0.05 in FX compared to the year-ago period.
Adjusted EBITDA in the third quarter of 2024 increased 96% to $9.9 million compared to $5.1 million for the same period in 2023. The increase was primarily driven by organic growth from both new and existing vendors, as well as contribution from the Company's acquisitions of DSS and DataSolutions. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, increased 500 basis points to 41% compared to 36% for the same period in 2023.
On September 30, 2024, cash and cash equivalents were $22.1 million compared to $36.3 million on December 31, 2023, while working capital decreased by $12.3 million during this period. The decrease in cash was primarily attributed to the cash paid at closing for the acquisition of DSS, $20.9 million, as well as the timing of receivable collections and payables. Climb had $0.9 million of outstanding debt on September 30, 2024, with no borrowings outstanding under its $50 million revolving credit facility.
For more information on the non-GAAP financial measures discussed in this press release, please see the section titled, "Non-GAAP Financial Measures," and the reconciliations of non-GAAP financial measures to their nearest comparable GAAP financial measures at the end of this press release.
Conference Call
The Company will conduct a conference call tomorrow, October 31, 2024, at 8:30 a.m. Eastern time to discuss its results for the third quarter ended September 30, 2024.
Climb management will host the conference call, followed by a question-and-answer period.
Date: Thursday, October 31, 2024Time: 8:30 a.m. Eastern timeToll-free dial-in number: (800) 274-8461International dial-in number: (203) 518-9814Conference ID: CLIMBWebcast: Climb's Q3 2024 Conference Call
If you have any difficulty registering or connecting with the conference call, please contact Elevate IR at (720) 330-2829.
The conference call will also be available for replay on the investor relations section of the Company's website at www.climbglobalsolutions.com.
About Climb Global Solutions
Climb Global Solutions, Inc. (NASDAQ:CLMB) is a value-added global IT distribution and solutions company specializing in emerging and innovative technologies. Climb operates across the US, Canada and Europe through multiple business units, including Climb Channel Solutions, Grey Matter and Climb Global Services. The Company provides IT distribution and solutions for companies in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries.
Additional information can be found by visiting www.climbglobalsolutions.com.
Non-GAAP Financial Measures
Climb Global Solutions uses non-GAAP financial measures, including adjusted gross billings, adjusted net income and adjusted EBITDA, as supplemental measures of the performance of the Company's business. Use of these financial measures has limitations, and you should not consider them in isolation or use them as substitutes for analysis of Climb's financial results under generally accepted accounting principles in the United States of America ("U.S. GAAP"). The attached tables provide definitions of these measures and a reconciliation of each non-GAAP financial measure to the most nearly comparable measure under U.S. GAAP.
Forward-Looking Statements
The statements in this release, other than statements of historical fact, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements are subject to certain risks and uncertainties. Many of the forward-looking statements may be identified by words such as "look forward," "believes," "expects," "intends," "anticipates," "plans," "estimates," "projects," "forecasts," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "in process," "under construction," "in development," "opportunity," "target," "outlook," "maintain," "continue," "goal," "aim," "commit," or similar expressions, or when we discuss our priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations. In this press release, the forward-looking statements relate to, among other things, declaring and reaffirming our strategic goals, future operating results, and the effects and potential benefits of the strategic acquisition on our business. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements include, without limitation, our ability to recognize the anticipated benefits of the acquisitions of Data Solutions Holdings Limited and Douglas Stewart Software & Services, LLC, the continued acceptance of the Company's distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, competitive pricing pressures, the successful integration of acquisitions, contribution of key vendor relationships and support programs, inflation, as well as factors that affect the software industry in general. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described in the section entitled "Risk Factors" contained in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and from time to time in the Company's filings with the Securities and Exchange Commission.
Company Contact
Drew ClarkChief Financial Officer(732)
Investor Relations Contact
Sean Mansouri, CFA or Aaron D'SouzaElevate IR(720)
CLIMB GLOBAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except share and per share amounts)
September 30, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
22,139
$
36,295
Accounts receivable, net of allowance for doubtful accounts of $640 and $709, respectively
247,907
222,269
Inventory, net
4,445
3,741
Prepaid expenses and other current assets
6,629
6,755
Total current assets
281,120
269,060
Equipment and leasehold improvements, net
12,151
8,850
Goodwill
29,628
27,182
Other intangibles, net
46,041
26,930
Right-of-use assets, net
937
878
Accounts receivable long-term, net
752
797
Other assets
863
1,077
Deferred income tax assets
448
324
Total assets
$
371,940
$
335,098
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses
$
273,893
$
249,648
Lease liability, current portion
533
450
Term loan, current portion
555
540
Total current liabilities
274,981
250,638
Lease liability, net of current portion
796
879
Deferred income tax liabilities
5,671
5,554
Term loan, net of current portion
334
752
Non-current liabilities
2,490
2,505
Total liabilities
284,272
260,328
Stockholders' equity
Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares
issued, and 4,606,790 and 4,573,448 shares outstanding , respectively
53
53
Additional paid-in capital
36,676
34,647
Treasury stock, at cost, 677,710 and 711,052 shares, respectively
(12,777
)
(12,623
)
Retained earnings
