Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DATALINK CORP | a12-10494_18k.htm |
| EX-99.2 - EX-99.2 - DATALINK CORP | a12-10494_1ex99d2.htm |
Exhibit 99.1
DATALINK REPORTS 2012 FIRST QUARTER OPERATING RESULTS
Record First Quarter Revenues and Net Earnings, Up 39% and 24% Year-Over-Year, Respectively
EDEN PRAIRIE, Minn., April 25, 2012 — Datalink (Nasdaq: DTLK), a leading provider of data center infrastructure and services, today reported results for its first quarter that ended March 31, 2012. Revenues for the quarter increased 39% to a record $119.1 million compared to $85.7 million for the prior-year period.
GAAP Results
On a GAAP basis, the company reported net earnings of $2.2 million or $0.12 per diluted share for the first quarter ended March 31, 2012. This compares to net earnings of $1.7 million or $0.12 per diluted share in the first quarter of 2011. Earnings from operations for the first quarter of 2012 were $3.6 million or 3.0% of revenues, compared to $3.0 million or 3.5% of revenues in the first quarter of 2011.
Non-GAAP Results
Non-GAAP net earnings for the first quarter of 2012 were $2.9 million, or $0.17 per diluted share, compared to non-GAAP net earnings of $2.2 million, or $0.16 per diluted share, in the first quarter of 2011. Earnings from operations for the first quarter of 2012 were $4.9 million or 4.1% of revenues, compare to $3.8 million or 4.5% of revenues in the first quarter of 2011. A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.
The company’s results for the quarter ended March 31, 2012 include:
· The additional 3.3 million common shares issued in connection with the follow-on stock offering in March 2011.
· The results of operations from the acquisition of Midwave Corporation, which was completed on October 3, 2011.
“Our first-quarter performance includes record revenues for both products and services. Our quarter-over-quarter revenues grew 39% and our quarterly sequential revenues grew 4% over the record revenues we achieved fourth quarter 2011. In addition, we experienced a 47% increase in the number of customers spending more than $1 million compared to first quarter 2011, and more than doubled the number of unified data center implementations with a corresponding 4000% increase in revenues to $16.6 million. Our networking and server revenues have increased from 9% to 16% of the product mix over the last year,” said Datalink President and CEO Paul Lidsky. “These numbers are a clear indication that our strategy of expanding our portfolio of data center products and services to sell and support new integrated data center technologies is fueling strong growth for the company.”
Outlook
Based on the company’s current backlog and sales pipeline, the company projects revenues of $125 million to $135 million for the second quarter of 2012 compared to $89.5 million for the second quarter of 2011. The company expects second quarter 2012 net earnings to be between $0.14 and $0.20 per diluted share on a GAAP basis, and net earnings of between $0.20 and $0.26 per diluted share on a non-GAAP basis. This compares to net earnings of $0.16 per diluted share and $0.19 per diluted share on a GAAP and non-GAAP basis, respectively, for the same period in 2011.
Non-GAAP earnings per share exclude the effect of acquisition accounting adjustments from the Incentra acquisition to deferred revenue and costs, integration and transaction costs related to acquisitions, stock-based compensation expense, amortization of intangible assets, and the
related effects on income taxes. The company estimates this total effect will be approximately $0.06 per diluted share for the second quarter of 2012.
Conference Call and Webcast Today
Datalink will hold a conference call today at 4:00 p.m. Central Standard Time, during which Datalink’s president and chief executive officer, Paul Lidsky, and vice president of finance and chief financial officer, Greg Barnum, will discuss company results and provide a business overview. Participants can access the conference call by dialing (877) 277-9804. Participants will be asked to identify the Datalink conference call and provide the designated identification number (69217552). A live Webcast of the conference call can be viewed via Datalink’s website at www.datalink.com.
About Datalink
A complete data center solutions and services provider for Fortune 500 and mid-tier enterprises, Datalink transforms data centers so they become more efficient, manageable and responsive to changing business needs. Datalink helps leverage and protect storage, server, and network investments with a focus on long-term value, offering a full lifecycle of services, from consulting and design to implementation, management and support. Datalink solutions span virtualization and consolidation, data storage and protection, advanced networks, and business continuity. Each delivers measurable performance gains and maximizes the business value of IT. For more information, call 800.448.6314 or visit www.datalink.com.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. This press release contains forward-looking statements, including our internal projections of anticipated 2012 results, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words “aim, “believe,” “expect,” “anticipate,” “intend,” “estimate”, “should” and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, including, but not limited to: the level of continuing demand for storage, including the effects of current economic and credit conditions; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; fixed employment costs that may impact profitability if we suffer revenue shortfalls; revenue recognition policies that may unpredictably defer reporting of our revenues; our ability to hire and retain key technical and sales personnel; our dependence on key suppliers; our ability to adapt to rapid technological change; risks associated with integrating possible future acquisitions; fluctuations
in our quarterly operating results; future changes in applicable accounting rules; and volatility in our stock price. Further, our revenues for any particular quarter are not necessarily reflected by our backlog of contracted orders, which also may fluctuate unpredictably. We cannot assure that we can grow or maintain our revenue and backlog from current levels.
Non-GAAP Details
Non-GAAP financial measures exclude the impact from acquisition accounting adjustments to deferred revenue and costs, stock-based compensation expense, amortization of acquisition intangible assets, integration and transaction costs related to acquisitions, early termination payments related to the Cross acquisition and the related effects on income taxes. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.
These non-GAAP financial measures facilitate management’s internal comparisons to our historical operating results and comparisons to competitors’ operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making, such as employee compensation planning. We believe that the presentation of these non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations.
# # #
Company Contacts:
Investors & Analysts:
Greg Barnum
Vice President and CFO
Phone: 952-279-4816
Email: gbarnum@datalink.com
Media & Alliances:
Suzanne Gallagher
SVP of Marketing
Phone: 720-566-5110
Email: sgallagher@datalink.com
Investor Relations:
Kim Payne
Investor Relations Coordinator
Phone: 952-279-4794
Fax: 952-944-7869
Email: einvestor@datalink.com
website: www.datalink.com
DATALINK CORPORATION
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
|
|
Three Months Ended |
| ||||
|
|
|
March 31, |
| ||||
|
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
|
| ||
|
Net sales: |
|
|
|
|
| ||
|
Products |
|
$ |
80,240 |
|
$ |
55,600 |
|
|
Services |
|
38,848 |
|
30,094 |
| ||
|
Total net sales |
|
119,088 |
|
85,694 |
| ||
|
|
|
|
|
|
| ||
|
Cost of sales: |
|
|
|
|
| ||
|
Cost of products |
|
62,584 |
|
42,226 |
| ||
|
Cost of services |
|
29,178 |
|
22,713 |
| ||
|
Total cost of sales |
|
91,762 |
|
64,939 |
| ||
|
Gross profit |
|
27,326 |
|
20,755 |
| ||
|
Operating expenses: |
|
|
|
|
| ||
|
Sales and marketing |
|
12,557 |
|
9,157 |
| ||
|
General and administrative |
|
4,724 |
|
3,829 |
| ||
|
Engineering |
|
5,794 |
|
4,387 |
| ||
|
Integration and transaction costs |
|
20 |
|
— |
| ||
|
Amortization of intangibles |
|
619 |
|
382 |
| ||
|
Total operating expenses |
|
23,714 |
|
17,755 |
| ||
|
Earnings from operations |
|
3,612 |
|
3,000 |
| ||
|
Interest income (expense), net |
|
(10 |
) |
3 |
| ||
|
Earnings before income taxes |
|
3,602 |
|
3,003 |
| ||
|
Income tax expense |
|
1,441 |
|
1,255 |
| ||
|
Net earnings |
|
$ |
2,161 |
|
$ |
1,748 |
|
|
|
|
|
|
|
| ||
|
Earnings per common share: |
|
|
|
|
| ||
|
Basic |
|
$ |
0.13 |
|
$ |
0.13 |
|
|
Diluted |
|
$ |
0.12 |
|
$ |
0.12 |
|
|
Weighted average common shares outstanding: |
|
|
|
|
| ||
|
Basic |
|
16,970 |
|
13,626 |
| ||
|
Diluted |
|
17,340 |
|
14,047 |
| ||
|
|
|
|
|
|
| ||
DATALINK CORPORATION
BALANCE SHEETS
(In thousands, except share data)
|
|
|
March 31, |
|
December 31, |
| ||
|
|
|
2012 |
|
2011 |
| ||
|
|
|
(Unaudited) |
|
|
| ||
|
Assets |
| ||||||
|
Current assets |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
25,534 |
|
$ |
18,947 |
|
|
Short term investments |
|
1,192 |
|
3,486 |
| ||
|
Accounts receivable, net |
|
77,976 |
|
102,289 |
| ||
|
Inventories |
|
4,195 |
|
1,736 |
| ||
|
Current deferred customer support contract costs |
|
69,391 |
|
62,901 |
| ||
|
Inventories shipped but not installed |
|
6,588 |
|
9,779 |
| ||
|
Income tax receivable |
|
— |
|
405 |
| ||
|
Other current assets |
|
1,269 |
|
1,169 |
| ||
|
Total current assets |
|
186,145 |
|
200,712 |
| ||
|
Property and equipment, net |
|
4,430 |
|
3,453 |
| ||
|
Goodwill |
|
32,446 |
|
32,446 |
| ||
|
Finite life intangibles, net |
|
8,416 |
|
9,035 |
| ||
|
Deferred customer support contract costs non-current |
|
31,582 |
|
28,785 |
| ||
|
Deferred tax asset |
|
3,159 |
|
3,159 |
| ||
|
Other assets |
|
327 |
|
361 |
| ||
|
Total assets |
|
$ |
266,505 |
|
$ |
277,951 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Stockholders’ Equity |
| ||||||
|
Current liabilities |
|
|
|
|
| ||
|
Accounts payable |
|
$ |
38,558 |
|
$ |
63,292 |
|
|
Accrued commissions |
|
4,947 |
|
5,069 |
| ||
|
Accrued sales and use tax |
|
1,929 |
|
2,574 |
| ||
|
Accrued expenses, other |
|
4,118 |
|
5,209 |
| ||
|
Income tax payable |
|
233 |
|
— |
| ||
|
Current deferred tax liability |
|
7,459 |
|
7,459 |
| ||
|
Customer deposits |
|
2,704 |
|
2,145 |
| ||
|
Current deferred revenue from customer support contracts |
|
84,596 |
|
76,998 |
| ||
|
Other current liabilities |
|
21 |
|
85 |
| ||
|
Total current liabilities |
|
144,565 |
|
162,831 |
| ||
|
Deferred revenue from customer support contracts non-current |
|
38,165 |
|
34,740 |
| ||
|
Other liabilities non-current |
|
925 |
|
195 |
| ||
|
Total liabilities |
|
183,655 |
|
197,766 |
| ||
|
|
|
|
|
|
| ||
|
Stockholders’ equity |
|
|
|
|
| ||
|
Common stock, $.001 par value, 50,000,000 shares authorized, 18,016,034 and 17,899,171 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively |
|
18 |
|
18 |
| ||
|
Additional paid-in capital |
|
66,717 |
|
66,213 |
| ||
|
Retained earnings |
|
16,115 |
|
13,954 |
| ||
|
Total stockholders’ equity |
|
82,850 |
|
80,185 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
266,505 |
|
$ |
277,951 |
|
DATALINK CORPORATION
RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME
(In thousands, except per share data)
(Unaudited)
|
|
|
Three Months Ended |
| ||||
|
|
|
March 31, |
| ||||
|
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
|
| ||
|
Earnings from operations on a GAAP basis |
|
$ |
3,612 |
|
$ |
3,000 |
|
|
GAAP operating margin |
|
3.0 |
% |
3.5 |
% | ||
|
|
|
|
|
|
| ||
|
Non-GAAP Adjustments: |
|
|
|
|
| ||
|
Purchase accounting adjustment to Incentra deferred revenue and cost, net |
|
12 |
|
36 |
| ||
|
Total gross margin adjustments |
|
12 |
|
36 |
| ||
|
|
|
|
|
|
| ||
|
Stock based compensation expense included in sales and marketing |
|
163 |
|
30 |
| ||
|
Stock based compensation expense included in general and administrative |
|
287 |
|
296 |
| ||
|
Stock based compensation expense included in engineering |
|
140 |
|
99 |
| ||
|
Integration and transaction costs |
|
20 |
|
— |
| ||
|
Amortization of intangible assets |
|
619 |
|
382 |
| ||
|
Total operating expense adjustments |
|
1,229 |
|
807 |
| ||
|
|
|
|
|
|
| ||
|
Non-GAAP earnings from operations |
|
4,853 |
|
3,843 |
| ||
|
Non-GAAP operating margin |
|
4.1 |
% |
4.5 |
% | ||
|
|
|
|
|
|
| ||
|
Interest income, net |
|
(10 |
) |
3 |
| ||
|
Income tax expense impact from Non-GAAP items |
|
1,961 |
|
1,607 |
| ||
|
|
|
|
|
|
| ||
|
Non-GAAP net earnings |
|
$ |
2,882 |
|
$ |
2,239 |
|
|
|
|
|
|
|
| ||
|
Non-GAAP net earnings per share - Basic |
|
$ |
0.17 |
|
$ |
0.16 |
|
|
Non-GAAP net earnings per share - Diluted |
|
$ |
0.17 |
|
$ |
0.16 |
|
|
|
|
|
|
|
| ||
|
Shares used in non-GAAP per share calculation - Basic |
|
16,970 |
|
13,626 |
| ||
|
Shares used in non-GAAP per share calculation - Diluted |
|
17,340 |
|
14,047 |
| ||
DATALINK CORPORATION
STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
Three Months Ended |
| ||||
|
|
|
March 31, |
| ||||
|
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from operating activities: |
|
|
|
|
| ||
|
Net earnings |
|
$ |
2,161 |
|
$ |
1,748 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
| ||
|
Provision (benefit) for bad debts |
|
(45 |
) |
24 |
| ||
|
Depreciation |
|
339 |
|
240 |
| ||
|
Amortization of finite lived intangibles |
|
619 |
|
382 |
| ||
|
Stock based compensation expense |
|
590 |
|
425 |
| ||
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
|
Accounts receivable, net |
|
24,358 |
|
2,599 |
| ||
|
Inventories |
|
732 |
|
907 |
| ||
|
Deferred costs/revenues/customer deposits, net |
|
2,295 |
|
981 |
| ||
|
Accounts payable |
|
(24,734 |
) |
(4,355 |
) | ||
|
Accrued expenses |
|
(1,858 |
) |
(949 |
) | ||
|
Income tax payable |
|
638 |
|
1,121 |
| ||
|
Other |
|
600 |
|
(512 |
) | ||
|
Net cash provided by operating activities |
|
5,695 |
|
2,611 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from investing activities: |
|
|
|
|
| ||
|
Purchase of investments |
|
— |
|
(1,994 |
) | ||
|
Sale of investments |
|
2,294 |
|
— |
| ||
|
Purchases of property and equipment |
|
(1,316 |
) |
(210 |
) | ||
|
Net cash provided by (used in) investing activities |
|
978 |
|
(2,204 |
) | ||
|
|
|
|
|
|
| ||
|
Cash flows from financing activities: |
|
|
|
|
| ||
|
Proceeds from stock offering |
|
— |
|
17,490 |
| ||
|
Excess tax from stock compensation |
|
467 |
|
97 |
| ||
|
Proceeds from issuance of common stock from option exercise |
|
177 |
|
460 |
| ||
|
Tax withholding payments reimbursed by restricted stock |
|
(730 |
) |
— |
| ||
|
Net cash provided by (used in) financing activities |
|
(86 |
) |
18,047 |
| ||
|
|
|
|
|
|
| ||
|
Increase in cash and cash equivalents |
|
6,587 |
|
18,454 |
| ||
|
Cash and cash equivalents, beginning of period |
|
18,947 |
|
8,988 |
| ||
|
Cash and cash equivalents, end of period |
|
$ |
25,534 |
|
$ |
27,442 |
|
|
|
|
|
|
|
| ||
|
Supplemental cash flow information: |
|
|
|
|
| ||
|
Cash paid for income taxes |
|
$ |
335 |
|
$ |
38 |
|
|
Cash received for income tax refunds |
|
$ |
— |
|
$ |
— |
|