CNXN - Connection (CNXN) Reports Third Quarter 2021 Results
THIRD QUARTER HIGHLIGHTS :
- Net sales: $751.4 million, up 15.1% y/y
- Gross profit: $120.7 million, up 11.9% y/y
- Net income: $20.0 million, up 18.4% y/y
- Diluted EPS: $0.76, up 18.1% y/y
Connection (PC Connection, Inc.; NASDAQ: CNXN ), a leading information technology solutions provider to business, government, healthcare and education markets, today announced results for the third quarter ended September 30, 2021.
“We are pleased to report record Q3 revenue and gross profit in both our Enterprise and Business Solutions segments. These results demonstrate the continued execution of our business strategy to connect our customers with technology that enhances growth, elevates productivity, and empowers innovation. This strong financial performance, while affected by on-going supply chain shortages, is expected to continue into fourth quarter,” said Tim McGrath, President and CEO of Connection. McGrath continued, “Our employees have gone above and beyond to help our customers manage issues associated with both their supply constraints and their on-going efforts to work-from-anywhere.”
Net sales for the quarter ended September 30, 2021 increased by 15.1% to $751.4 million, compared to $652.8 million for the prior year quarter. Net income for the quarter ended September 30, 2021 increased by 18.4% to $20.0 million, or $0.76 per diluted share, compared to net income of $16.9 million, or $0.64 per diluted share, for the prior year quarter.
Net sales for the nine months ended September 30, 2021 increased by 9.3% to $2.1 billion, compared to $1.9 billion for the nine months ended September 30, 2020. Net income for the nine months ended September 30, 2021 increased by 20.4% to $47.5 million, or $1.80 per diluted share, compared to net income of $39.5 million, or $1.50 per diluted share for the nine months ended September 30, 2020.
Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense and restructuring and other charges (“Adjusted EBITDA”) totaled $102.4 million for the twelve months ended September 30, 2021, compared to $99.3 million for the twelve months ended September 30, 2020. 1
1 Adjusted EBITDA is a non-GAAP measure. See page 10 for the definition and reconciliation.
Quarterly Highlights
- Continued growth across our vertical markets:
- Manufacturing saw revenue growth of 24% year-over-year and 7% sequentially compared to Q2 2021 as manufacturers looked to augment the available workforce, automate, and invest in new technologies to address both short-term and long-term workforce challenges stemming from COVID-19 and workforce skills shortages.
- Healthcare experienced revenue growth of 10% year-over-year as a result of organizations expanding and securing infrastructure to support a surge in employee remote access and telemedicine activity, as well as improving the patient and provider experience.
- Our Technology Solutions Group saw strong demand and growth for managed services, cybersecurity services and network transformation services. Our services business grew more than 23% year-over-year.
- Achieved Microsoft Azure Expert Managed Service Provider (MSP) certification. Connection has demonstrated industry-leading technical capabilities and offers end-to-end support across Azure cloud environments through our Microsoft Center of Excellence.
Quarterly Performance by Segment :
- Net sales for the Business Solutions segment increased by 21.8% to $281.4 million in the third quarter of 2021, compared to $231.0 million in the prior year quarter. Gross profit increased by 17.5% to $54.7 million in the third quarter of 2021, compared to $46.6 million in the prior year quarter. Gross margin decreased by 73 basis points to 19.4% primarily due to a higher mix of lower margin client-based solutions.
- Net sales for the Public Sector Solutions segment decreased by 1.1% to $160.2 million in the third quarter of 2021, compared to $162.0 million in the prior year quarter. Sales to state and local government and educational institutions increased by 2.5%, compared to the prior year quarter, while sales to the federal government decreased by 15.8% primarily due to the timing of customer rollouts. Gross profit decreased by 10.8% to $20.3 million in the third quarter of 2021, compared to $22.8 million in the prior year quarter. Gross margin decreased by 138 basis points to 12.7% primarily due to a change in product mix and a decrease in software sales recorded on a net basis.
- Net sales for the Enterprise Solutions segment increased by 19.2% to $309.7 million in the third quarter of 2021, compared to $259.8 million in the prior year quarter. Gross profit increased by 18.7% to $45.6 million in the third quarter of 2021, compared to $38.4 million in the prior year quarter. Gross margin decreased by 6 basis points to 14.7%.
Quarterly Sales by Product Mix :
- Notebook/mobility sales had a record quarter at $304 million which represented an increase of 50% year over year and accounted for 40% of net sales in the third quarter of 2021, compared to 31% of net sales in the third quarter of 2020. The increase in this product category was due to the growing hybrid work environment.
- Accessories sales increased by 4% year over year and accounted for 12% of net sales in the third quarter of 2021, compared to 13% of net sales in the third quarter of 2020.
- Software sales decreased by 21% year over year and accounted for 8% of net sales in the third quarter of 2021, compared to 12% in the third quarter of 2020. The decrease in software sales is primarily related to an increase in software recognized on a net basis.
- Desktop sales increased by 7% year over year and accounted for 9% of net sales in the third quarter of 2021, compared to 10% of net sales in the third quarter of 2020.
Selling, general and administrative (“SG&A”) expenses increased in the third quarter of 2021 to $93.4 million from $86.8 million in the prior year quarter. SG&A as a percentage of net sales was 12.4%, compared to 13.3% in the prior year quarter. The increase in SG&A was primarily due to an increase in variable compensation due to the higher levels of gross profit and increased marketing costs.
Cash and cash equivalents were $89.7 million at September 30, 2021, compared to $95.7 million at December 31, 2020.
Conference Call and Webcast
Connection will host a conference call and live webcast today, November 4, 2021 at 4:30 p.m. ET to discuss its third quarter financial results. To access the conference call (audio only), please dial 877-776-4016 (US) or 973-638-3231 (International) and enter the confirmation number 8894527. A web-cast of the conference call, which will be broadcast live via the Internet, and a copy of this press release, can be accessed on Connection’s website at ir.connection.com . For those unable to participate in the live call, a replay of the webcast will be available at ir.connection.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year.
Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP financial measure. This measure is included to provide additional information with respect to the Company’s operating performance and earnings. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. Our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation to the most directly comparable GAAP measure is available in the tables at the end of this release.
About Connection
PC Connection, Inc. and its subsidiaries, dba Connection, ( www.connection.com ; NASDAQ: CNXN) is a Fortune 1000 company headquartered in Merrimack, NH. With offices throughout the United States, Connection delivers custom-configured computer systems overnight from its ISO 9001:2015 certified technical configuration lab at its distribution center in Wilmington, OH. In addition, the Company has over 2,500 technical certifications to ensure that it can solve the most complex issues of its customers. Connection 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) is a rapid-response provider of IT products and services serving primarily the small-and medium-sized business sector. It offers more than 425,000 brand-name products through its staff of technically trained sales account managers, publications, and its website at www.connection.com .
Connection–Enterprise Solutions (561.237.3300), www.connection.com/enterprise , provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and real-time access to over 425,000 products and 1,600 vendors through MarkITplace ® , a proprietary next-generation, cloud-based supply chain solution. The team’s engineers, software licensing specialists, and subject matter experts help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle.
Connection–Public Sector Solutions (800.800.0019), 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 .
| "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," "should," "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 continuation of the COVID-19 pandemic, including, without limitation, its impact on global supply chains and responses to it, 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, product availability and market acceptance, new products, continuation of key vendor and customer relationships and support programs, the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, fluctuations in operating results and the ability of the Company to manage personnel levels in response to fluctuations in revenue, the ability of the Company to hire and retain qualified sales representatives and other essential personnel, the impact of changes in accounting requirements, continued successful integration of the new ERP system, 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 (“SEC”) for the year ended December 31, 2020. 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 |
| At or for the Three Months Ended September 30, |
| 2021 |
| 2020 |
|
|
| % |
| (Amounts and shares in thousands, except operating data, P/E ratio, and per share data) |
| Change |
| Operating Data: |
| Net sales |
| $ |
| 751,368 |
|
|
| $ |
| 652,752 |
|
|
| 15 |
| % |
| Diluted earnings per share |
| $ |
| 0.76 |
|
|
| $ |
| 0.64 |
|
|
| 19 |
| % |
| Gross margin |
|
|
| 16.1 |
| % |
|
|
| 16.5 |
| % |
| Operating margin |
|
|
| 3.6 |
| % |
|
|
| 3.2 |
| % |
| Return on equity (1) |
|
|
| 9.8 |
| % |
|
|
| 10.2 |
| % |
| Inventory turns |
|
|
| 15 |
|
|
|
|
| 15 |
|
|
| Days sales outstanding |
|
|
| 66 |
|
|
|
|
| 73 |
|
|
| % of |
| % of |
| Product Mix: |
| Net Sales |
| Net Sales |
| Notebooks/Mobility |
|
|
| 40 |
| % |
|
|
| 31 |
| % |
| Accessories |
|
|
| 12 |
|
|
|
|
| 13 |
|
|
| Displays |
|
|
| 10 |
|
|
|
|
| 8 |
|
|
| Desktops |
|
|
| 9 |
|
|
|
|
| 10 |
|
|
| Software |
|
|
| 8 |
|
|
|
|
| 11 |
|
|
| Servers/Storage |
|
|
| 7 |
|
|
|
|
| 9 |
|
|
| Net/Com Products |
|
|
| 7 |
|
|
|
|
| 10 |
|
|
| Other Hardware/Services |
|
|
| 7 |
|
|
|
|
| 8 |
|
|
| Total Net Sales |
|
|
| 100 |
| % |
|
|
| 100 |
| % |
| Stock Performance Indicators: |
| Actual shares outstanding |
|
|
| 26,205 |
|
|
|
|
| 26,142 |
|
|
| Total book value per share |
| $ |
| 26.18 |
|
|
| $ |
| 24.03 |
|
|
| Tangible book value per share |
| $ |
| 23.14 |
|
|
| $ |
| 20.94 |
|
|
| Closing price |
| $ |
| 44.03 |
|
|
| $ |
| 41.06 |
|
|
| Market capitalization |
| $ |
| 1,153,806 |
|
|
| $ |
| 1,073,391 |
|
|
| Trailing price/earnings ratio |
|
|
| 18.1 |
|
|
|
|
| 17.7 |
|
|
| LTM Adjusted EBITDA (2) |
| $ |
| 102,402 |
|
|
| $ |
| 99,291 |
|
|
| Adjusted market capitalization/LTM Adjusted EBITDA (3) |
|
|
| 10.4 |
|
|
|
|
| 9.7 |
|
|
| (1) Calculated as the trailing twelve months' of net income divided by the average trailing twelve months' of equity. |
| (2) Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation and restructuring and other related charges. |
| (3) Adjusted market capitalization is defined as gross market capitalization less cash balance. |
| REVENUE AND MARGIN INFORMATION |
| For the Three Months Ended September 30, |
| 2021 |
|
|
| 2020 |
| Net |
|
|
| Gross |
|
|
| Net |
|
|
| Gross |
| (amounts in thousands) |
| Sales |
|
|
| Margin |
|
|
| Sales |
|
|
| Margin |
| Enterprise Solutions |
| $ |
| 309,722 |
| 14.7 |
| % |
| $ |
| 259,767 |
| 14.8 |
| % |
| Business Solutions |
|
|
| 281,425 |
| 19.4 |
|
|
|
|
| 230,985 |
| 20.2 |
|
|
| Public Sector Solutions |
|
|
| 160,221 |
| 12.7 |
|
|
|
|
| 162,000 |
| 14.1 |
|
|
| Total |
| $ |
| 751,368 |
| 16.1 |
| % |
| $ |
| 652,752 |
| 16.5 |
| % |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| (amounts in thousands, except per share data) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| Net sales |
| $ |
| 751,368 |
|
|
| $ |
| 652,752 |
|
|
| $ |
| 2,092,421 |
|
|
| $ |
| 1,914,603 |
|
|
| Cost of sales |
|
|
| 630,671 |
|
|
|
|
| 544,922 |
|
|
|
|
| 1,754,877 |
|
|
|
|
| 1,604,656 |
|
|
| Gross profit |
|
|
| 120,697 |
|
|
|
|
| 107,830 |
|
|
|
|
| 337,544 |
|
|
|
|
| 309,947 |
|
|
| Selling, general and administrative expenses |
|
|
| 93,369 |
|
|
|
|
| 86,753 |
|
|
|
|
| 272,332 |
|
|
|
|
| 256,640 |
|
|
| Restructuring and other charges |
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| 992 |
|
|
| Income from operations |
|
|
| 27,328 |
|
|
|
|
| 21,077 |
|
|
|
|
| 65,212 |
|
|
|
|
| 52,315 |
|
|
| Other income, net |
|
|
| - |
|
|
|
|
| (17 |
| ) |
|
|
| 7 |
|
|
|
|
| 80 |
|
|
| Income tax provision |
|
|
| (7,283 |
| ) |
|
|
| (4,130 |
| ) |
|
|
| (17,698 |
| ) |
|
|
| (12,926 |
| ) |
| Net income |
| $ |
| 20,045 |
|
|
| $ |
| 16,930 |
|
|
| $ |
| 47,521 |
|
|
| $ |
| 39,469 |
|
|
| Earnings per common share: |
| Basic |
| $ |
| 0.77 |
|
|
| $ |
| 0.65 |
|
|
| $ |
| 1.81 |
|
|
| $ |
| 1.51 |
|
|
| Diluted |
| $ |
| 0.76 |
|
|
| $ |
| 0.64 |
|
|
| $ |
| 1.80 |
|
|
| $ |
| 1.50 |
|
|
| Shares used in the computation of earnings per common share: |
| Basic |
|
|
| 26,197 |
|
|
|
|
| 26,130 |
|
|
|
|
| 26,186 |
|
|
|
|
| 26,158 |
|
|
| Diluted |
|
|
| 26,368 |
|
|
|
|
| 26,311 |
|
|
|
|
| 26,362 |
|
|
|
|
| 26,337 |
|
|
| September 30, |
| December 31, |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| 2021 |
| 2020 |
| (amounts in thousands) |
| ASSETS |
| Current Assets: |
| Cash and cash equivalents |
| $ |
| 89,728 |
|
|
| $ |
| 95,655 |
|
|
| Accounts receivable, net |
|
|
| 585,380 |
|
|
|
|
| 611,021 |
|
|
| Inventories, net |
|
|
| 175,374 |
|
|
|
|
| 140,867 |
|
|
| Prepaid expenses and other current assets |
|
|
| 11,797 |
|
|
|
|
| 11,437 |
|
|
| Total current assets |
|
|
| 862,279 |
|
|
|
|
| 858,980 |
|
|
| Property and equipment, net |
|
|
| 60,623 |
|
|
|
|
| 61,537 |
|
|
| Right-of-use assets, net |
|
|
| 10,218 |
|
|
|
|
| 12,821 |
|
|
| Goodwill |
|
|
| 73,602 |
|
|
|
|
| 73,602 |
|
|
| Intangibles assets, net |
|
|
| 6,173 |
|
|
|
|
| 7,088 |
|
|
| Other assets |
|
|
| 1,031 |
|
|
|
|
| 1,345 |
|
|
| Total Assets |
| $ |
| 1,013,926 |
|
|
| $ |
| 1,015,373 |
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current Liabilities: |
| Accounts payable |
| $ |
| 217,084 |
|
|
| $ |
| 266,846 |
|
|
| Accrued payroll |
|
|
| 24,023 |
|
|
|
|
| 17,828 |
|
|
| Accrued expenses and other liabilities |
|
|
| 52,241 |
|
|
|
|
| 57,586 |
|
|
| Total current liabilities |
|
|
| 293,348 |
|
|
|
|
| 342,260 |
|
|
| Deferred income taxes |
|
|
| 18,525 |
|
|
|
|
| 18,525 |
|
|
| Operating lease liability |
|
|
| 7,353 |
|
|
|
|
| 9,631 |
|
|
| Other liabilities |
|
|
| 8,528 |
|
|
|
|
| 8,630 |
|
|
| Total Liabilities |
|
|
| 327,754 |
|
|
|
|
| 379,046 |
|
|
| Stockholders’ Equity: |
| Common stock |
|
|
| 290 |
|
|
|
|
| 289 |
|
|
| Additional paid-in capital |
|
|
| 122,214 |
|
|
|
|
| 119,891 |
|
|
| Retained earnings |
|
|
| 609,605 |
|
|
|
|
| 562,084 |
|
|
| Treasury stock at cost |
|
|
| (45,937 |
| ) |
|
|
| (45,937 |
| ) |
| Total Stockholders’ Equity |
|
|
| 686,172 |
|
|
|
|
| 636,327 |
|
|
| Total Liabilities and Stockholders’ Equity |
| $ |
| 1,013,926 |
|
|
| $ |
| 1,015,373 |
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| (amounts in thousands) |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| Cash Flows from Operating Activities: |
| Net income |
| $ |
| 20,045 |
|
|
| $ |
| 16,930 |
|
|
| $ |
| 47,521 |
|
|
| $ |
| 39,469 |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
| Depreciation and amortization |
|
|
| 2,947 |
|
|
|
|
| 3,833 |
|
|
|
|
| 9,165 |
|
|
|
|
| 10,335 |
|
|
| Adjustments to credit losses reserve |
|
|
| 645 |
|
|
|
|
| (351 |
| ) |
|
|
| 1,704 |
|
|
|
|
| 3,276 |
|
|
| Stock-based compensation expense |
|
|
| 1,026 |
|
|
|
|
| 618 |
|
|
|
|
| 3,118 |
|
|
|
|
| 1,866 |
|
|
| Loss on disposal of fixed assets |
|
|
| 2 |
|
|
|
|
| - |
|
|
|
|
| 2 |
|
|
|
|
| 13 |
|
|
| Changes in assets and liabilities: |
| Accounts receivable |
|
|
| (4,369 |
| ) |
|
|
| (141,893 |
| ) |
|
|
| 22,437 |
|
|
|
|
| (42,610 |
| ) |
| Inventories |
|
|
| (8,295 |
| ) |
|
|
| 30,943 |
|
|
|
|
| (34,507 |
| ) |
|
|
| (10,023 |
| ) |
| Prepaid expenses and other current assets |
|
|
| 1,791 |
|
|
|
|
| 1,434 |
|
|
|
|
| (360 |
| ) |
|
|
| 43 |
|
|
| Other non-current assets |
|
|
| (3 |
| ) |
|
|
| (539 |
| ) |
|
|
| 314 |
|
|
|
|
| (719 |
| ) |
| Accounts payable |
|
|
| (40,863 |
| ) |
|
|
| 36,236 |
|
|
|
|
| (49,997 |
| ) |
|
|
| 48,736 |
|
|
| Accrued expenses and other liabilities |
|
|
| 4,088 |
|
|
|
|
| (3,223 |
| ) |
|
|
| 9,437 |
|
|
|
|
| (3,987 |
| ) |
| Net cash provided by (used in) operating activities |
|
|
| (22,986 |
| ) |
|
|
| (56,012 |
| ) |
|
|
| 8,834 |
|
|
|
|
| 46,399 |
|
|
| Cash Flows from Investing Activities: |
| Purchases of equipment and capitalized software |
|
|
| (2,481 |
| ) |
|
|
| (1,397 |
| ) |
|
|
| (7,092 |
| ) |
|
|
| (9,611 |
| ) |
| Proceeds from life insurance |
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| 1,500 |
|
|
|
|
| - |
|
|
| Net cash used in investing activities |
|
|
| (2,481 |
| ) |
|
|
| (1,397 |
| ) |
|
|
| (5,592 |
| ) |
|
|
| (9,611 |
| ) |
| Cash Flows from Financing Activities: |
| Purchase of treasury shares |
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| (10,222 |
| ) |
| Dividend payments |
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| (8,375 |
| ) |
|
|
| (8,427 |
| ) |
| Issuance of stock under Employee Stock Purchase Plan |
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| - |
|
|
|
|
| 536 |
|
|
| Payment of payroll taxes on stock-based compensation through shares withheld |
|
|
| (470 |
| ) |
|
|
| (483 |
| ) |
|
|
| (794 |
| ) |
|
|
| (684 |
| ) |
| Net cash used in financing activities |
|
|
| (470 |
| ) |
|
|
| (483 |
| ) |
|
|
| (9,169 |
| ) |
|
|
| (18,797 |
| ) |
| (Decrease) increase in cash and cash equivalents |
|
|
| (25,937 |
| ) |
|
|
| (57,892 |
| ) |
|
|
| (5,927 |
| ) |
|
|
| 17,991 |
|
|
| Cash and cash equivalents, beginning of period |
|
|
| 115,665 |
|
|
|
|
| 165,943 |
|
|
|
|
| 95,655 |
|
|
|
|
| 90,060 |
|
|
| Cash and cash equivalents, end of period |
| $ |
| 89,728 |
|
|
| $ |
| 108,051 |
|
|
| $ |
| 89,728 |
|
|
| $ |
| 108,051 |
|
|
| Non-cash Investing Activities: |
| Accrued capital expenditures |
| $ |
| 394 |
|
|
| $ |
| 248 |
|
|
|
|
| 394 |
|
|
|
|
| 248 |
|
|
| Supplemental Cash Flow Information: |
| Income taxes paid |
| $ |
| 7,459 |
|
|
| $ |
| 12,716 |
|
|
| $ |
| 20,600 |
|
|
| $ |
| 13,798 |
|
|
| EBITDA AND ADJUSTED EBITDA |
| A reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure is detailed below. Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for restructuring and other charges, 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. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. Our non-GAAP financial measures may not be comparable to other similar titled measures of other companies. |
| (amounts in thousands) |
| Three Months Ended September 30, |
| LTM Ended September 30, (1) |
| 2021 |
| 2020 |
| % Change |
| 2021 |
| 2020 |
| % Change |
| Net income |
| $ |
| 20,045 |
| $ |
| 16,930 |
| 18 |
| % |
| $ |
| 63,817 |
| $ |
| 61,435 |
| 4 |
| % |
| Depreciation and amortization |
|
|
| 2,947 |
|
|
| 3,833 |
| (23 |
| %) |
|
|
| 12,434 |
|
|
| 13,465 |
| (8 |
| %) |
| Income tax expense |
|
|
| 7,283 |
|
|
| 4,130 |
| 76 |
| % |
|
|
| 22,203 |
|
|
| 20,826 |
| 7 |
| % |
| Interest expense |
|
|
| - |
|
|
| 25 |
| (100 |
| %) |
|
|
| 29 |
|
|
| 103 |
| (72 |
| %) |
| EBITDA |
|
|
| 30,275 |
|
|
| 24,918 |
| 21 |
| % |
|
|
| 98,483 |
|
|
| 95,829 |
| 3 |
| % |
| Restructuring and other charges (2) |
|
|
| - |
|
|
| - |
| 0 |
| % |
|
|
| - |
|
|
| 992 |
| (100 |
| %) |
| Stock-based compensation |
|
|
| 1,026 |
|
|
| 618 |
| 66 |
| % |
|
|
| 3,919 |
|
|
| 2,470 |
| 59 |
| % |
| Adjusted EBITDA |
| $ |
| 31,301 |
| $ |
| 25,536 |
| 23 |
| % |
| $ |
| 102,402 |
| $ |
| 99,291 |
| 3 |
| % |
| (1) LTM: Last twelve months |
| (2) Restructuring and other charges in 2020 consist of severance and other charges related to internal restructuring activities. |
| ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE |
| A reconciliation from Net Income to Adjusted Net Income is detailed below. Adjusted Net Income is defined as Net Income plus restructuring and other charges, net of tax. A reconciliation from Diluted Earnings per Share to Adjusted Diluted Earnings per Share is detailed below. Adjusted Diluted Earnings per Share is defined Diluted Earnings per Shared adjusted for restructuring and other charges, net of tax. Adjusted Net Income and Adjusted Diluted Earnings Per Share are considered non-GAAP financial measures (see note above in Adjusted EBITDA for a description of non-GAAP financial measures). The Company believes that these non-GAAP disclosures provide helpful information with respect to the Company's operating performance. |
| (amounts in thousands, except per share data) |
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| 2021 |
| 2020 |
| % Change |
| 2021 |
| 2020 |
| % Change |
| Net income |
| $ |
| 20,045 |
| $ |
| 16,930 |
| $ |
| 47,521 |
| $ |
| 39,469 |
| Restructuring and other charges, net of tax (1) |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 747 |
| Adjusted Net Income |
| $ |
| 20,045 |
| $ |
| 16,930 |
| 18 |
| % |
| $ |
| 47,521 |
| $ |
| 40,216 |
| 18 |
| % |
| Diluted shares |
|
|
| 26,368 |
|
|
| 26,311 |
|
|
| 26,362 |
|
|
| 26,337 |
| Diluted Earnings per Share |
| $ |
| 0.76 |
| $ |
| 0.64 |
| 18 |
| % |
| $ |
| 1.80 |
| $ |
| 1.50 |
| 20 |
| % |
| Adjusted Diluted Earnings per Share |
| $ |
| 0.76 |
| $ |
| 0.64 |
| 18 |
| % |
| $ |
| 1.80 |
| $ |
| 1.53 |
| 18 |
| % |
| (1) Restructuring and other charges in 2020 consist of severance and other charges related to internal restructuring activities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211104006240/en/
Investor Relations Contact:
Thomas Baker, 603.683.2505
Senior Vice President, CFO, and Treasurer
tom@connection.com