Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 05, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | PCM, INC. | |
Entity Central Index Key | 0000937941 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 12,327,791 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,835 | $ 6,032 |
Accounts receivable, net of allowances of $1,730 and $1,714 | 498,827 | 463,487 |
Inventories | 52,832 | 61,617 |
Prepaid expenses and other current assets | 9,170 | 8,535 |
Total current assets | 567,664 | 539,671 |
Property and equipment, net | 68,062 | 69,286 |
Goodwill | 87,397 | 87,226 |
Intangible assets, net | 7,144 | 8,103 |
Deferred income taxes | 1,384 | 1,483 |
Investment and other assets | 44,252 | 15,181 |
Total assets | 775,903 | 720,950 |
Current liabilities: | ||
Accounts payable | 377,862 | 357,212 |
Accrued expenses and other current liabilities | 61,454 | 63,213 |
Deferred revenue | 7,115 | 7,966 |
Line of credit | 77,104 | 88,399 |
Notes payable - current | 3,569 | 3,283 |
Total current liabilities | 527,104 | 520,073 |
Notes payable | 37,569 | 29,507 |
Other long-term liabilities | 41,262 | 16,583 |
Deferred income taxes | 2,424 | 1,894 |
Total liabilities | 608,359 | 568,057 |
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; 17,718,443 and 17,573,700 shares issued; 12,327,791 and 12,183,048 shares outstanding | 18 | 18 |
Additional paid-in capital | 139,597 | 138,703 |
Treasury stock, at cost: 5,390,652 shares | (38,536) | (38,536) |
Accumulated other comprehensive loss | (433) | (1,313) |
Retained earnings | 66,898 | 54,021 |
Total stockholders' equity | 167,544 | 152,893 |
Total liabilities and stockholders' equity | $ 775,903 | $ 720,950 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 1,730 | $ 1,714 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 17,718,443 | 17,573,700 |
Common stock, shares outstanding | 12,327,791 | 12,183,048 |
Treasury stock, shares | 5,390,652 | 5,390,652 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 548,326 | $ 546,430 | $ 1,082,315 | $ 1,089,262 |
Cost of goods sold | 457,367 | 456,013 | 908,242 | 915,249 |
Gross profit | 90,959 | 90,417 | 174,073 | 174,013 |
Selling, general and administrative expenses | 78,090 | 77,222 | 152,777 | 154,576 |
Operating profit | 12,869 | 13,195 | 21,296 | 19,437 |
Interest expense, net | 2,293 | 2,315 | 4,582 | 4,777 |
Equity income from unconsolidated affiliate | 425 | 129 | 698 | 304 |
Income before income taxes | 11,001 | 11,009 | 17,412 | 14,964 |
Income tax expense | 2,799 | 3,126 | 4,535 | 4,270 |
Net income | $ 8,202 | $ 7,883 | $ 12,877 | $ 10,694 |
Basic and Diluted Earnings Per Common Share | ||||
Basic | $ 0.67 | $ 0.66 | $ 1.05 | $ 0.90 |
Diluted | $ 0.62 | $ 0.64 | $ 0.97 | $ 0.88 |
Weighted average number of common shares outstanding: | ||||
Basic | 12,289 | 11,912 | 12,253 | 11,878 |
Diluted | 13,242 | 12,259 | 13,211 | 12,145 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 8,202 | $ 7,883 | $ 12,877 | $ 10,694 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 442 | (562) | 880 | (818) |
Total other comprehensive income (loss) | 442 | (562) | 880 | (818) |
Comprehensive income | $ 8,644 | $ 7,321 | $ 13,757 | $ 9,876 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in-Capital [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2017 | $ 17 | $ 134,646 | $ (38,536) | $ 251 | $ 31,248 | $ 127,626 |
Balance, shares at Dec. 31, 2017 | 11,780,000 | |||||
Stock option exercises, including related income tax benefit | 221 | 221 | ||||
Stock option exercises, including related income tax benefit, shares | 50,000 | |||||
Stock-based compensation expense | 672 | 672 | ||||
Net income | 2,811 | 2,811 | ||||
Translation adjustments | (256) | (256) | ||||
Balance at Mar. 31, 2018 | $ 17 | 135,539 | (38,536) | (5) | 34,059 | 131,074 |
Balance, shares at Mar. 31, 2018 | 11,830,000 | |||||
Balance at Dec. 31, 2017 | $ 17 | 134,646 | (38,536) | 251 | 31,248 | 127,626 |
Balance, shares at Dec. 31, 2017 | 11,780,000 | |||||
Net income | 10,694 | |||||
Translation adjustments | (818) | |||||
Balance at Jun. 30, 2018 | $ 18 | 135,899 | (38,536) | (567) | 41,942 | 138,755 |
Balance, shares at Jun. 30, 2018 | 11,894,000 | |||||
Balance at Mar. 31, 2018 | $ 17 | 135,539 | (38,536) | (5) | 34,059 | 131,074 |
Balance, shares at Mar. 31, 2018 | 11,830,000 | |||||
Stock option exercises, including related income tax benefit | $ 1 | (400) | (400) | |||
Stock option exercises, including related income tax benefit, shares | 64,000 | |||||
Stock-based compensation expense | 760 | 760 | ||||
Net income | 7,883 | 7,883 | ||||
Translation adjustments | (562) | (562) | ||||
Balance at Jun. 30, 2018 | $ 18 | 135,899 | (38,536) | (567) | 41,942 | 138,755 |
Balance, shares at Jun. 30, 2018 | 11,894,000 | |||||
Balance at Dec. 31, 2018 | $ 18 | 138,703 | (38,536) | (1,313) | 54,021 | $ 152,893 |
Balance, shares at Dec. 31, 2018 | 12,183,000 | 12,183,048 | ||||
Stock option exercises, including related income tax benefit | 592 | $ 592 | ||||
Stock option exercises, including related income tax benefit, shares | 72,000 | |||||
Stock-based compensation expense | 800 | 800 | ||||
Net income | 4,675 | 4,675 | ||||
Translation adjustments | 438 | 438 | ||||
Balance at Mar. 31, 2019 | $ 18 | 14,095 | (38,536) | (875) | 58,696 | 159,398 |
Balance, shares at Mar. 31, 2019 | 12,255,000 | |||||
Balance at Dec. 31, 2018 | $ 18 | 138,703 | (38,536) | (1,313) | 54,021 | $ 152,893 |
Balance, shares at Dec. 31, 2018 | 12,183,000 | 12,183,048 | ||||
Net income | $ 12,877 | |||||
Translation adjustments | 880 | |||||
Balance at Jun. 30, 2019 | $ 18 | 139,597 | (38,536) | (433) | 66,898 | $ 167,544 |
Balance, shares at Jun. 30, 2019 | 12,328,000 | 12,327,791 | ||||
Balance at Mar. 31, 2019 | $ 18 | 14,095 | (38,536) | (875) | 58,696 | $ 159,398 |
Balance, shares at Mar. 31, 2019 | 12,255,000 | |||||
Stock option exercises, including related income tax benefit | (1,268) | (1,268) | ||||
Stock option exercises, including related income tax benefit, shares | 73,000 | |||||
Stock-based compensation expense | 770 | 770 | ||||
Net income | 8,202 | 8,202 | ||||
Translation adjustments | 442 | 442 | ||||
Balance at Jun. 30, 2019 | $ 18 | $ 139,597 | $ (38,536) | $ (433) | $ 66,898 | $ 167,544 |
Balance, shares at Jun. 30, 2019 | 12,328,000 | 12,327,791 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash Flows From Operating Activities | ||
Net income | $ 12,877 | $ 10,694 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,093 | 6,913 |
Equity income from unconsolidated affiliate | (698) | (304) |
Distribution from equity method investee | 279 | 162 |
Provision for deferred income taxes | 649 | 984 |
Non-cash stock-based compensation | 1,570 | 1,432 |
Change in operating assets and liabilities: | ||
Accounts receivable | (35,340) | (82,414) |
Inventories | 8,785 | 24,980 |
Prepaid expenses and other current assets | (635) | 135 |
Other assets | 3,986 | 1,571 |
Accounts payable | 27,216 | 102,681 |
Accrued expenses and other current liabilities | (9,477) | 1,247 |
Deferred revenue | (851) | 4,291 |
Total adjustments | 1,577 | 61,678 |
Net cash provided by operating activities | 14,454 | 72,372 |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (3,281) | (2,358) |
Acquisition of Stack Technology | (166) | |
Net cash used in investing activities | (3,281) | (2,524) |
Cash Flows From Financing Activities | ||
Net payments under line of credit | (11,295) | (64,478) |
Borrowing under note payable | 10,000 | |
Payments under notes payable | (1,656) | (1,638) |
Change in book overdraft | (6,566) | 1,952 |
Payments of earn-out liability | (2,199) | |
Payments of obligations under capital lease | (761) | (349) |
Proceeds from stock issued under stock option plans | 825 | 261 |
Payment for deferred financing costs | (108) | (43) |
Payment of taxes related to net-settled stock awards | (1,504) | (450) |
Net cash used in financing activities | (11,065) | (66,944) |
Effect of foreign currency on cash flow | 695 | (514) |
Net change in cash and cash equivalents | 803 | 2,390 |
Cash and cash equivalents at beginning of the period | 6,032 | 9,113 |
Cash and cash equivalents at end of the period | 6,835 | 11,503 |
Supplemental Cash Flow Information | ||
Interest paid | 4,382 | 4,579 |
Income taxes paid (refund), net | 8,578 | (1,558) |
Supplemental Non-Cash Investing and Financing Activities | ||
Financed and accrued purchases of property and equipment | $ 638 | $ 1,134 |
Basis of Presentation and Descr
Basis of Presentation and Description of Company | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Description of Company | 1. Basis of Presentation and Description of Company PCM, Inc. (“PCM”) is a leading multi-vendor provider of technology solutions, including hardware products, software and services, offered through our dedicated sales force, ecommerce channels and technology services teams. Since our founding in 1987, we have served our customers by offering products and services from vendors such as Adobe, Apple, Cisco, Dell, Hewlett Packard Enterprise, HP Inc., Lenovo, Microsoft, Oracle, Symantec and VMware. We provide our customers with comprehensive solutions incorporating leading products and services across a variety of technology practices and platforms such as cloud, security, data center, networking, collaboration and mobility. Our sales and marketing efforts allow our vendor partners to reach multiple customer segments including small, medium and enterprise businesses, state, local and federal governments and educational institutions. We have prepared the unaudited condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and assumptions that affect amounts reported herein. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, our actual results reported in future periods may be affected by changes in those estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations for interim financial reporting. In the opinion of management, all adjustments, consisting only of normal recurring items which are necessary for a fair presentation, have been included. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC. We operate in four reportable segments: Commercial, Public Sector, Canada and United Kingdom. Our reportable operating segments are primarily aligned based upon our reporting of results as used by our chief operating decision maker in evaluating the operating results and performance of our company. We include corporate related expenses such as legal, accounting, information technology, product management and other administrative costs that are not otherwise included in our reportable operating segments in Corporate & Other. We sell primarily to customers in the United States, Canada and the UK, and maintain offices in the United States, Canada and the UK, as well as in the Philippines. During the three months ended June 30, 2019, we generated approximately 79% of our revenue in our Commercial segment, 8% of our revenue in our Public Sector segment, 9% of our revenue in our Canada segment and 4% of our revenue in our United Kingdom segment. During the six months ended June 30, 2019, we generated approximately 79% of our revenue in our Commercial segment, 8% of our revenue in our Public Sector segment, 9% of our revenue in our Canada segment and 4% of our revenue in our United Kingdom segment. Our Commercial segment sells complex technology solutions to commercial businesses in the United States, using multiple sales channels, including a field relationship-based selling model, an outbound phone based sales force, a field services organization and online extranets. Our Public Sector segment consists of sales made primarily to federal, state and local governments, as well as educational institutions. The Public Sector segment utilizes an outbound phone and field relationship-based selling model, as well as contract and bid business development teams and an online extranet. Our Canada segment consists of sales made to customers in the Canadian market beginning as of the respective dates of our acquisition of Acrodex and certain assets of Systemax in October and December 2015, respectively, as well as the acquisition of Stratiform in December 2016. Our United Kingdom segment consists of results of our UK subsidiary, PCM Technology Solutions UK, Ltd. (“PCM UK”), and its wholly-owned subsidiaries, which serve as our hub for the UK and the rest of Europe. Proposed Insight Merger Transaction On June 23, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Insight Enterprises, Inc., a Delaware corporation (“Insight”) and Trojan Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Insight (“Merger Sub”). Pursuant to, and on the terms and subject to the conditions of, the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger. Consummation of the Merger is subject to customary conditions including, among others, (i) the approval of the Company’s stockholders and (ii) the receipt of antitrust approval or clearance under applicable antitrust or competition laws. In addition, the obligation of each party to consummate the Merger is also conditioned on the other party’s representations and warranties being true and correct (subject to certain materiality qualifications) and the other party having performed in all material respects its obligations under the Merger Agreement. Insight’s obligations to consummate the Merger are further subject to the absence of a “Material Adverse Effect” (as defined in the Merger Agreement) with respect to the Company since the date of the Merger Agreement. While the Merger Agreement contemplates that Insight will obtain acquisition financing concurrently with the transaction, Insight’s obligations under the Merger Agreement are not subject to a financing contingency. The Company has agreed to take certain actions under the Merger Agreement in support of Insight’s acquisition financing. Each of Insight, the Company and Merger Sub has made customary representations and warranties and agreed to customary pre-closing covenants in the Merger Agreement, including, among others, the mutual covenant of each of Insight and the Company to use their respective reasonable best efforts to consummate and make effective the transactions contemplated by the Merger Agreement. In addition, the Company has agreed to other customary pre-closing covenants, including, among others, to conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the consummation of the Merger. The Merger Agreement also provides that, subject to certain exceptions with respect to certain unsolicited proposals, the Company will not, and will cause its subsidiaries and directors and officers not to, and will use reasonable best efforts to cause its and its subsidiaries’ representatives not to, directly or indirectly, solicit acquisition proposals or participate in any discussions concerning, or provide non-public information concerning the Company or any of its subsidiaries in connection with, any acquisition proposal. However, prior to the receipt of stockholder approval of the Merger, the Company’s board of directors (the “Board”) may, subject to certain conditions, change its recommendation in favor of approval of the Merger Agreement, if and only if, in connection with the receipt of a superior proposal or occurrence of an intervening event, it determines in good faith after consultation with its financial advisor and outside legal counsel, that failure to make such change in recommendation would be inconsistent with the directors’ fiduciary duties under applicable law. The Merger Agreement also requires, subject to certain exceptions, that the Company convene a meeting of its stockholders to vote upon the adoption of the Merger Agreement as promptly as practicable following the effectiveness of the proxy statement relating to such meeting. A special meeting of the stockholders of PCM has been scheduled for August 26, 2019. The Merger Agreement contains termination rights for each of Insight and the Company, including, among others, (i) in the event that the Merger has not been consummated by November 20, 2019, (ii) in the event that the requisite approval of the Company’s stockholders is not obtained upon a vote thereon, (iii) in the event that any governmental authority shall have taken action to restrain, enjoin or prohibit the consummation of the Merger, which action shall have become final and non-appealable and (iv) in the event that there is a breach by the other party of any of its representations, warranties, covenants or agreements, which breach is sufficiently material and not timely cured or curable. In addition, Insight may terminate the Merger Agreement if, prior to receipt of the requisite approval of the Company’s stockholders, the Board shall have changed their recommendation in respect of the Merger. The Company may also terminate the Merger Agreement to enter into a superior proposal, subject to certain conditions, including the payment of a termination fee as described in the Merger Agreement. Assuming timely satisfaction or waiver of the necessary closing conditions, the Company anticipates that the Merger will be completed in the third quarter of 2019. For additional information related to the Merger, please refer to the Merger Agreement, which is incorporated herein by reference as Exhibit 2.1 to this report. In addition, see “Risk Factors” in Part II, Item 1A of this report for a discussion of certain risks due to the announcement and pendency of the proposed Merger or the failure of the Merger to be completed that could have a material adverse effect on the Company’s business and operating results. |
New Accounting Standards and Ac
New Accounting Standards and Accounting Policy | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
New Accounting Standards and Accounting Policy | 2. New Accounting Standards and Accounting Policy In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplified the testing of goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for public companies for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We are currently evaluating the effects that the adoption of ASU 2017-04 will have on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220) — Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the enactment of the U.S. Tax Cuts and Jobs Act (“the Act”). The update also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Act as well as their accounting policy for releasing income tax effects from accumulated other comprehensive income. ASU 2018-02 is effective for financial statements issued for annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. We did not adopt the optional guidance of this accounting standard update as the potential impact on our consolidated financial statements is not material. Adoption of New Lease Accounting Standard In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities, initially measured at present value of the lease payments, on its balance sheet for leases and classified as either financing or operating leases. The new lease standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted ASC 842 on January 1, 2019, using the modified retrospective method, and we elected the package of practical expedients provided in ASC 842. In accordance with ASC 842, we did not restate comparative periods and instead reported comparative periods under ASC 840, “Leases.” We recorded operating lease ROU assets of $33.7 million as part of “Other assets” and corresponding lease obligations of $4.9 million and $32.3 million as part of “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our consolidated balance sheet upon adoption of ASC 842 on January 1, 2019. There was no material impact to our consolidated statement of operations and no cumulative effect adjustment to our retained earnings upon adoption of ASC 842. See Note 5 below for more information. Lease Accounting Policy ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We recognize ROU lease assets and lease liabilities at lease commencement on our consolidated balance sheet based on the present value of lease payments over the lease term using a discount rate determined based on our incremental borrowing rate since the rate implicit in each lease is not readily determinable. We elected the package of practical expedients, which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification of any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component. We also elected the hindsight practical expedient, which allows us to use hindsight in determining the lease term. We do not record an ROU asset and corresponding lease liability for leases with an initial term of 12 months or less (“short-term leases”). The terms in our leases may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Judgment is required in our assessment as to whether renewal or termination options are reasonably certain to be exercised and factors such as contractual terms compared to current market rates, the importance of the facility and location to the Company’s operations, among others, are considered. Lease payments are made in accordance with the lease terms and lease expense, including short-term lease expense, is recognized on a straight-line basis over the lease term. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 3. Revenue The following table presents our total net sales disaggregated by our major product line and our reportable segments (in thousands): Commercial Public Canada United Kingdom Corporate & Consolidated Three Months Ended June 30, 2019 Hardware & Software Products $ 396,805 $ 42,761 $ 43,535 $ 19,156 $ (186 ) $ 502,071 Services 34,534 2,258 8,367 1,082 14 46,255 Total $ 431,339 $ 45,019 $ 51,902 $ 20,238 $ (172 ) $ 548,326 Three Months Ended June 30, 2018 Hardware & Software Products $ 381,515 $ 69,945 $ 39,888 $ 12,325 $ (160 ) $ 503,513 Services 29,435 4,767 7,528 1,187 — 42,917 Total $ 410,950 $ 74,712 $ 47,416 $ 13,512 $ (160 ) $ 546,430 Six Months Ended June 30, 2019 Hardware & Software Products $ 793,839 $ 79,664 $ 82,542 $ 36,378 $ (339 ) $ 992,084 Services 66,028 5,402 16,553 2,234 14 90,231 Total $ 859,867 $ 85,066 $ 99,095 $ 38,612 $ (325 ) $ 1,082,315 Six Months Ended June 30, 2018 Hardware & Software Products $ 763,284 $ 122,866 $ 86,488 $ 28,993 $ (314 ) $ 1,001,317 Services 62,397 7,908 15,048 2,592 — 87,945 Total $ 825,681 $ 130,774 $ 101,536 $ 31,585 $ (314 ) $ 1,089,262 The change in our deferred revenue related to contracts with customers was as follows (in thousands): Current Long-Term Total Balance at December 31, 2018 $ 7,966 (1) $ 758 (2) $ 8,724 Deferral of revenue 19,232 205 19,437 Recognition of deferred revenue (20,090 ) (101 ) (20,191 ) Foreign currency translation 7 — 7 Balance at June 30, 2019 $ 7,115 (1) $ 862 (2) $ 7,977 (1) Presented as “Deferred revenue” on our consolidated balance sheets. (2) Presented as part of “Other long-term liabilities” on our consolidated balance sheets. At June 30, 2019, we had an immaterial amount of contract assets resulting from revenue being recognized in excess of the amount that we have the right to invoice the customer. Revenue allocated to remaining performance obligations represents non-cancellable contracted revenue that has not yet been recognized, which includes unearned revenue and amounts that will be delivered and recognized as revenue in future periods. Contracted, but not recognized, revenue was $29.3 million as of June 30, 2019, of which we expect to recognize approximately 60% over the next 12 months and the remainder thereafter. We applied the practical expedient provided under the revenue recognition standard and have not included information about remaining performance obligations that have original expected duration of one year or less. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets Goodwill The change in the carrying amounts of indefinite-lived goodwill was as follows by segment (in thousands): Commercial Public Sector Canada United Kingdom Total Balance at December 31, 2018 $ 69,735 $ 8,322 $ 4,609 $ 4,560 $ 87,226 Foreign currency translation — — 193 (22 ) 171 Balance at June 30, 2019 $ 69,735 $ 8,322 $ 4,802 $ 4,538 $ 87,397 Intangible Assets The following table sets forth the amounts recorded for intangible assets (in thousands): Weighted At June 30, 2019 At December 31, 2018 Lives Gross Accumulated Net Gross Accumulated Net Patent, trademarks, trade names & URLs 5 $ 5,311 (1) $ 1,740 $ 3,571 $ 5,304 (1) $ 1,502 $ 3,802 Customer relationships 14 13,558 10,048 3,510 13,460 9,358 4,102 Non-compete agreements 5 237 174 63 2,087 1,888 199 Total intangible assets $ 19,106 $ 11,962 $ 7,144 $ 20,851 $ 12,748 $ 8,103 (1) Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. Amortization expense for intangible assets was approximately $0.4 million and $0.7 million for the three months ended June 30, 2019 and 2018, respectively, and $1.0 million and $1.6 million for the six months ended June 30, 2019 and 2018, respectively. Estimated amortization expense for intangible assets as of June 30, 2019 in each of the next five years and thereafter is as follows: $0.9 million in the remainder of 2019, $1.3 million in 2020, $0.5 million in 2021, $0.4 million in 2022, $0.3 million in 2023 and $0.8 million thereafter. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | 5. Leases Our operating leases are primarily related to facility leases for administration, sales, inventory warehousing and configuration. Our operating At June 30, 2019, our finance leases, which are primarily related to technology equipment used in our business and included as part of property and equipment on our balance sheet, were immaterial. During the three and six months ended June 30, 2019, our variable and short-term lease costs were immaterial. The following tables provide detailed information about our operating leases (in thousands): Lease assets and liabilities Balance Sheet Classification At June 30, 2019 ROU assets “Other assets” $ 32,312 Current lease liabilities “Accrued expenses and other current liabilities” $ 4,694 Non-current lease liabilities “Other long-term liabilities” 31,212 Total lease liabilities $ 35,906 At June 30, 2019 Weighted-average remaining lease term 8 years Weighted-average discount rate 3.94 % Operating lease costs Income Statement Classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Lease costs “Selling, general and administrative expenses” $ 1,569 $ 3,133 Cash paid for operating lease liabilities 1,499 3,063 The following table sets forth maturities of our operating lease liabilities under ASC 842 (in thousands): At June 30, 2019 Remainder of 2019 $ 3,100 2020 5,751 2021 5,700 2022 5,703 2023 4,846 Thereafter 17,339 Total 42,439 Less: Imputed interest (6,533 ) Total lease liabilities $ 35,906 The following table sets forth future minimum lease payments under non-cancelable leases under ASC 840 at December 31, 2018 (in thousands): 2019 2020 2021 2022 2023 Thereafter Total Operating lease obligations $ 6,765 $ 6,186 $ 6,088 $ 5,180 $ 4,386 $ 21,969 $ 50,574 Capital lease obligations 1,325 1,041 571 259 224 — 3,420 Total minimum payments $ 8,090 $ 7,227 $ 6,659 $ 5,439 $ 4,610 $ 21,969 $ 53,994 Total rent expense under our operating leases, net of sublease income, was $2.0 million and $3.6 million in the three and six months ended June 30, 2019, respectively. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt The following table sets forth our outstanding debt balances (in thousands): At June 30, 2019 At December 31, 2018 Revolving credit facility, LIBOR plus 1.50%, maturing in March 2021 $ 77,104 $ 88,399 Note payable, LIBOR plus 1.50%, maturing in March 2021 (1) 8,349 9,243 Note payable, LIBOR plus 1.50%, maturing in March 2021 (2) 1,470 1,628 Note payable, greater of 2% or LIBOR plus 2.15%, maturing in April 2022 (3) 4,108 4,207 Note payable, LIBOR plus 2.25%, maturing in January 2022 (4) 3,565 3,679 Note payable, Prime plus 0.25% or LIBOR plus 2.125%, maturing in March 2021 (5) 6,334 6,489 Note payable, Prime plus 0.375% or LIBOR plus 2.25%, maturing in March 2024 (6) 17,093 7,308 Note payable, LIBOR plus 3.2%, maturing in May 2025 219 236 Total 118,242 121,189 Less: Total current debt 80,673 91,682 Total non-current debt $ 37,569 $ 29,507 (1) Refer to discussion below regarding the sub-line secured by the building in Santa Monica, California. (2) Refer to discussion below regarding the sub-line secured by the building in Woodridge, Illinois (3) Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Irvine, California. (4) Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Lewis Center, Ohio. (5) Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in New Albany, Ohio. (6) Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in El Segundo, California. Line of Credit and Related Notes We maintain a credit facility, which functions as a working capital line of credit with a borrowing base of inventory and accounts receivable, including certain credit card receivables, and a portion of the value of certain real estate. On January 19, 2016, we entered into a Fourth Amended and Restated Loan and Security Agreement (the “Fourth Amended Loan Agreement”) with certain lenders and Wells Fargo Capital Finance, LLC as administrative and collateral agent (the “Lenders”). On July 7, 2016, we entered into a First Amendment to the Fourth Amended Loan Agreement with the Lenders and on February 24, 2017, we entered into a Second Amendment to the Fourth Amended Loan Agreement with the Lenders. On October 24, 2017, PCM, all of its wholly-owned domestic subsidiaries (collectively with PCM, the “US Borrowers”), all of its Canadian subsidiaries (collectively, the “Canadian Borrowers”) and its PCM UK subsidiary (together with the US Borrowers and the Canadian Borrowers, the “Borrowers”), entered into a Fifth Amended and Restated Loan and Security Agreement (the “Fifth Amended Loan Agreement”) with the Lenders. The Fifth Amended Loan Agreement amends and restates the Fourth Amended Loan Agreement. The terms of our credit facility, as amended through June 30, 2019, provide for (i) a Maximum Credit, as defined in the credit facility, of $345,000,000; (ii) a sub-line of up to C$40,000,000 as the Canadian Maximum Credit and a sub-line of up to £25,000,000 as the UK Maximum Credit ((i) and (ii) collectively the “Revolving Line”); (iii) a Maturity Date of March 19, 2021; (iv) interest on outstanding balance under the Canadian Maximum Credit based on the Canadian Base Rate (calculated as the greater of CDOR plus one percentage point and the “prime rate” for Canadian Dollar commercial loans, as further defined in the Fifth Amended Loan Agreement) or at the election of the Borrowers, based on the CDOR Rate, plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (v) interest on outstanding UK balances based on LIBOR plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (vi) interest on outstanding balance under the Maximum Credit based on the Eurodollar Rate plus a margin, depending on average excess availability under the revolving line, ranging from 1.50% to 1.75%; and (vii) a monthly unused line fee of 0.25% per year on the amount, if any, by which the Maximum Credit, then in effect, exceeds the average daily principal balance of outstanding borrowings during the immediately preceding month. The terms of our credit facility are more fully described in the Fifth Amended Loan Agreement. The credit facility is collateralized by substantially all of our assets. In addition to the security interest required by the credit facility, certain of our vendors have security interests in some of our assets related to their products. The credit facility has as its single financial covenant a minimum fixed charge coverage ratio (FCCR) requirement in the event an FCCR triggering event has occurred. An FCCR triggering event is comprised of maintaining certain specified daily and average excess availability thresholds. In the event the FCCR covenant applies, the fixed charge coverage ratio is 1.0 to 1.0 calculated on a trailing four-quarter basis as of the end of the last quarter immediately preceding such FCCR triggering event date. At June 30, 2019, we were in compliance with our financial covenant under the credit facility. Loan availability under the line of credit fluctuates daily and is affected by many factors, including eligible assets on-hand, opportunistic purchases of inventory and availability and our utilization of early-pay discounts. At June 30, 2019, we had $232.3 million available to borrow for working capital advances under the line of credit. In connection with, and as part of, our revolving credit facility, we maintain a sub-line with a limit of $12.5 million secured by our properties located in Santa Monica, California, with a monthly principal amortization of $149,083 and a sub-line with a limit of $2.2 million secured by our property in Woodridge, Illinois, with a monthly principal amortization of $26,250. On July 7, 2016, we entered into a Credit Agreement with Castle Pines Capital LLC (“Castle Pines”), which provides for a credit facility (“Channel Finance Facility”) to finance the purchase of inventory from a list of approved vendors. The aggregate availability under the Channel Finance Facility is variable and discretionary, but has initially been set at $35 million. Each advance under the Channel Finance Facility will be made directly to an approved vendor and must be repaid on the earlier of (i) the payment due date as set by Castle Pines or (ii) the date (if any) when the inventory is lost, stolen or damaged. No interest accrues on advances paid on or prior to payment due date. The Channel Finance Facility is secured by a lien on certain of our assets, subject to an intercreditor arrangement with the Lenders. The Channel Finance Facility has an initial term of one year, but shall be automatically renewed for one year periods from year to year thereafter unless terminated earlier by either party within reasonable notice periods. As of June 30, 2019, we had no outstanding balance under the Channel Finance Facility. At June 30, 2019, the effective weighted average annual interest rate on our outstanding amounts under the credit facility, term note and variable interest rate notes payable was 3.95%. The carrying amounts of our line of credit borrowings and notes payable approximate their fair value based upon the current rates offered to us for obligations of similar terms and remaining maturities. The following table sets forth the maturities of our outstanding debt balances as of June 30, 2019 (in thousands): Remainder of 2019 2020 2021 2022 2023 Thereafter Total Total long-term debt obligations $ 1,842 $ 3,562 $ 13,684 $ 7,334 $ 727 $ 13,989 $ 41,138 Revolving credit facility 77,104 — — — — — 77,104 Total $ 78,946 $ 3,562 $ 13,684 $ 7,334 $ 727 $ 13,989 $ 118,242 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes We determine our interim income tax provision by applying our effective income tax rate expected to be applicable for the full fiscal year to pre-tax income for the interim periods, adjusting the result for any discrete items which occur during the interim period. Accounting for Uncertainty in Income Taxes At each of June 30, 2019 and December 31, 2018, we had unrecognized tax benefits of $0.3 million related to research credits. For the three and six months ended June 30, 2019 and 2018, we did not recognize any interest or penalties for uncertain tax positions, nor were there any interest or penalties accrued at June 30, 2019 and December 31, 2018. We do not anticipate any significant increases or decreases in our unrecognized tax benefits within the next twelve months. We are subject to U.S. and foreign income tax examinations for years subsequent to 2014, and state income tax examinations for years subsequent to 2013. However, to the extent allowable by law, the tax authorities may have a right to examine prior periods when net operating losses or tax credits were generated and carried forward for subsequent utilization, and make adjustments up to the amount of the net operating losses or credit carryforwards. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity We have a board approved discretionary stock repurchase program under which shares may be repurchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending on market conditions. Our Board of Directors originally adopted the plan in October 2008 with an initial authorized maximum of $10 million. The plan was amended in September 2012 and increased to $20 million, again amended in April 2015 and increased to a total of $30 million, and again amended in August 2017 and increased to a total of $40 million. Under the program, the shares may be repurchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending on market conditions. The repurchased shares are held as treasury stock. We made no repurchases of shares of our common stock under this program during the three and six months ended June 30, 2019. At June 30, 2019, we had $2.5 million available for stock repurchases under the program, subject to any limitations that may apply from time to time under our existing credit facility. Under the terms of the Merger Agreement with Insight, we have covenanted not to purchase, redeem or otherwise acquire any shares of our common stock without the prior consent of Insight and do not intend to repurchase any shares of our common stock under the repurchase program described above. We have never paid cash dividends on our capital stock and our credit facility prohibits us from paying any cash dividends on our capital stock. Therefore, we do not currently anticipate paying dividends; we intend to retain any earnings to finance the growth and development of our business. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Basic and Diluted Earnings Per Common Share | |
Earnings Per Share | 9. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reported periods. Diluted EPS reflects the potential dilution that could occur under the treasury stock method if stock options and other commitments to issue common stock were exercised, except in loss periods where the effect would be antidilutive. Approximately 52,000 and 988,000 common shares for the three months ended June 30, 2019 and 2018, respectively, and approximately 50,000 and 775,000 common shares for the six months ended June 30, 2019 and 2018, respectively, have been excluded from the calculation of diluted EPS because the effect of their inclusion would have been antidilutive. A reconciliation of the amounts used in the basic and diluted EPS computation was as follows (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Net income $ 8,202 $ 7,883 $ 12,877 $ 10,694 Denominator: Basic EPS - Weighted average number of common shares outstanding 12,289 11,912 12,253 11,878 Dilutive effect of stock awards 953 347 958 267 Diluted EPS - Weighted average number of common shares outstanding 13,242 12,259 13,211 12,145 Net earnings per share: Basic $ 0.67 $ 0.66 $ 1.05 $ 0.90 Diluted 0.62 0.64 0.97 0.88 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 10. Segment Information Summarized segment information for our operations for the periods presented is as follows (in thousands): Commercial Public Canada United Kingdom Corporate & Consolidated Three Months Ended June 30, 2019 Net sales $ 431,339 $ 45,019 $ 51,902 $ 20,238 $ (172 ) $ 548,326 Gross profit 71,174 7,550 8,228 4,146 (139 ) 90,959 Depreciation and amortization expense(1) 1,165 77 195 83 1,438 2,958 Operating profit (loss) 25,550 2,967 1,379 (267 ) (16,760 ) 12,869 Three Months Ended June 30, 2018 Net sales $ 410,950 $ 74,712 $ 47,416 $ 13,512 $ (160 ) $ 546,430 Gross profit 70,147 10,377 7,378 2,672 (157 ) 90,417 Depreciation and amortization expense(1) 1,255 123 231 73 1,626 3,308 Operating profit (loss) 25,492 4,633 1,166 (1,102 ) (16,994 ) 13,195 Six Months Ended June 30, 2019 Net sales $ 859,867 $ 85,066 $ 99,095 $ 38,612 $ (325 ) $ 1,082,315 Gross profit 137,604 12,626 16,212 7,924 (293 ) 174,073 Depreciation and amortization expense(1) 2,416 179 385 161 2,952 6,093 Operating profit (loss) 48,195 3,108 2,932 (811 ) (32,128 ) 21,296 Six Months Ended June 30, 2018 Net sales $ 825,681 $ 130,774 $ 101,536 $ 31,585 $ (314 ) $ 1,089,262 Gross profit 135,995 16,401 15,739 6,187 (309 ) 174,013 Depreciation and amortization expense(1) 2,618 298 497 122 3,378 6,913 Operating profit (loss) 47,209 4,683 2,628 (1,394 ) (33,689 ) 19,437 (1) Primary fixed assets relating to network and servers are managed by the Corporate headquarters. As such, depreciation expense relating to such assets is included as part of Corporate & Other. As of June 30, 2019 and December 31, 2018, we had total consolidated assets of $775.9 million and $721.0 million, respectively. Our management does not have available to them and does not use total assets measured at the segment level in allocating resources. Therefore, such information relating to segment assets is not provided herein. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies As of June 30, 2019, there has been no material change in any off-balance sheet arrangements since December 31, 2018, except for the operating leases that were recorded on our balance sheet as a result of our adoption of ASC 842 on January 1, 2019. See Notes 2 and 5 above for more information. Legal Proceedings From time to time, we receive claims of and become subject to consumer protection, employment, intellectual property and other litigation related to the conduct of our business. Any such litigation could result in a material amount of legal or related expenses and be time consuming and could divert our management and key personnel from our business operations. In connection with any such litigation, we may be subject to significant damages or equitable remedies relating to the operation of our business. Any such litigation may materially harm our business, results of operations and financial condition. Merger Litigation On July 30, 2019, Jordan Rosenblatt, a purported stockholder of the Company, filed a putative class action in the United States District Court for the District of Delaware, entitled Rosenblatt v. PCM, Inc. Rosenblatt Breyer v. PCM, Inc. Breyer En Pointe Acquisition Litigation Matters We acquired certain assets of En Pointe Technologies in 2015. The assets were acquired by an indirect wholly-owned subsidiary of PCM, which subsidiary now operates under the En Pointe brand (“En Pointe”). We are currently involved in several disputes related to the En Pointe acquisition as described below. Any litigation, arbitration or other dispute resolution process could be costly and time consuming and could divert our management and key personnel from our business operations. In connection with any such matters, we may be subject to significant damages or equitable remedies relating to the operation of our business and could incur significant costs in asserting, defending, or settling any such matters. While we intend to pursue and/or defend these actions vigorously, we cannot determine with any certainty the costs or outcome of such pending or future matters, and they may materially harm our business, results of operations or financial condition. Delaware Litigation with Collab9. California Litigation with Collab9. California Litigation Against Yunus, Ovex, Din and Zones. Pakistan Litigation. In addition to the action by Ovex against En Pointe in Islamabad, on April 3, 2018, the sole shareholder of Ovex filed an action in Lahore Pakistan purportedly on behalf of Ovex against certain officers and directors of En Pointe, PCM and PCM’s subsidiary in Pakistan claiming that Ovex was harmed as a result of an alleged scheme to drive Ovex employees to leave Ovex and join Pakistan-based direct competitors of PCM and affiliates of PCM. On September 11, 2017, July 5, 2018, and again on August 17, 2018, the U.S. District Court for the Central District of California entered orders confirming that the pending proceedings in Islamabad and Lahore Pakistan are barred by the arbitration requirements of the applicable service contract between the parties. Despite the orders by the U.S. District Court for the Central District of California, Ovex and its shareholder continue to pursue the litigation in Islamabad and Lahore. On July 4, 2019, the Civil Court in Lahore issued an Order agreeing to “implead” certain PCM legal entities at our request, allowing our legal entities to join the case as additional parties (defendants) and, as a result, permitting us to bring before the Civil Court in Lahore jurisdictional challenges based on the arbitration agreement between Ovex and the PCM entities, the rulings of the arbitrator in our favor related to these matters, the orders of the U.S. District Court for the Central District of California barring all of this litigation in Pakistan pursuant to an international treaty to which the U.S. and Pakistan are parties relating to the enforceability of contractual arbitration agreements and the rulings of the Civil Court in Islamabad dismissing the Islamabad case relating to the same factual and legal matters. In the July 4, 2019 Order of the Lahore Civil Court, the Court also determined that Latif had a “different status” than Ovex, and had separate standing to sue for “mental damages and agony” as a form of tort claim unique to him individually. The Court did not yet rule on our jurisdictional challenges to the case, however, which remain to be decided by the Civil Court in Lahore now that our legal entities have been added to the case and, based on the Civil Court’s July 4 order, now have the standing to bring these challenges before the Court. We also expect to file an appeal with the Lahore High Court challenging the portion of the Civil Court’s order that found Latif could pursue tort claims separate from the Ovex entity before the Civil Court in Lahore. The Company believes all of these claims by Ovex and Latif in the courts in Pakistan are speculative and wholly without merit, and continues to vigorously defend the claims on jurisdictional grounds. However, the outcome of these matters in Pakistan is uncertain and, as a result, the Company cannot reasonably estimate the loss or range of loss that could result in the event of an unfavorable outcome in the Pakistan courts. Accordingly, no amounts have been accrued for any liability that may result from the resolution of this matter. Ovex Arbitration. Federal Anti-Suit Injunction Action. |
New Accounting Standards and _2
New Accounting Standards and Accounting Policy (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Adoption of New Lease Accounting Standard | Adoption of New Lease Accounting Standard In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASC 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities, initially measured at present value of the lease payments, on its balance sheet for leases and classified as either financing or operating leases. The new lease standard is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted ASC 842 on January 1, 2019, using the modified retrospective method, and we elected the package of practical expedients provided in ASC 842. In accordance with ASC 842, we did not restate comparative periods and instead reported comparative periods under ASC 840, “Leases.” We recorded operating lease ROU assets of $33.7 million as part of “Other assets” and corresponding lease obligations of $4.9 million and $32.3 million as part of “Accrued expenses and other current liabilities” and “Other long-term liabilities,” respectively, on our consolidated balance sheet upon adoption of ASC 842 on January 1, 2019. There was no material impact to our consolidated statement of operations and no cumulative effect adjustment to our retained earnings upon adoption of ASC 842. See Note 5 below for more information. |
Lease Accounting Policy | Lease Accounting Policy ROU assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We recognize ROU lease assets and lease liabilities at lease commencement on our consolidated balance sheet based on the present value of lease payments over the lease term using a discount rate determined based on our incremental borrowing rate since the rate implicit in each lease is not readily determinable. We elected the package of practical expedients, which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification of any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component. We also elected the hindsight practical expedient, which allows us to use hindsight in determining the lease term. We do not record an ROU asset and corresponding lease liability for leases with an initial term of 12 months or less (“short-term leases”). The terms in our leases may include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Judgment is required in our assessment as to whether renewal or termination options are reasonably certain to be exercised and factors such as contractual terms compared to current market rates, the importance of the facility and location to the Company’s operations, among others, are considered. Lease payments are made in accordance with the lease terms and lease expense, including short-term lease expense, is recognized on a straight-line basis over the lease term. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Net Sales Disaggregated by Major Product Line and Reportable Segments | The following table presents our total net sales disaggregated by our major product line and our reportable segments (in thousands): Commercial Public Canada United Kingdom Corporate & Consolidated Three Months Ended June 30, 2019 Hardware & Software Products $ 396,805 $ 42,761 $ 43,535 $ 19,156 $ (186 ) $ 502,071 Services 34,534 2,258 8,367 1,082 14 46,255 Total $ 431,339 $ 45,019 $ 51,902 $ 20,238 $ (172 ) $ 548,326 Three Months Ended June 30, 2018 Hardware & Software Products $ 381,515 $ 69,945 $ 39,888 $ 12,325 $ (160 ) $ 503,513 Services 29,435 4,767 7,528 1,187 — 42,917 Total $ 410,950 $ 74,712 $ 47,416 $ 13,512 $ (160 ) $ 546,430 Six Months Ended June 30, 2019 Hardware & Software Products $ 793,839 $ 79,664 $ 82,542 $ 36,378 $ (339 ) $ 992,084 Services 66,028 5,402 16,553 2,234 14 90,231 Total $ 859,867 $ 85,066 $ 99,095 $ 38,612 $ (325 ) $ 1,082,315 Six Months Ended June 30, 2018 Hardware & Software Products $ 763,284 $ 122,866 $ 86,488 $ 28,993 $ (314 ) $ 1,001,317 Services 62,397 7,908 15,048 2,592 — 87,945 Total $ 825,681 $ 130,774 $ 101,536 $ 31,585 $ (314 ) $ 1,089,262 |
Schedule of Change in Deferred Revenue Related to Contract with Customers | The change in our deferred revenue related to contracts with customers was as follows (in thousands): Current Long-Term Total Balance at December 31, 2018 $ 7,966 (1) $ 758 (2) $ 8,724 Deferral of revenue 19,232 205 19,437 Recognition of deferred revenue (20,090 ) (101 ) (20,191 ) Foreign currency translation 7 — 7 Balance at June 30, 2019 $ 7,115 (1) $ 862 (2) $ 7,977 (1) Presented as “Deferred revenue” on our consolidated balance sheets. (2) Presented as part of “Other long-term liabilities” on our consolidated balance sheets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amounts of Goodwill | The change in the carrying amounts of indefinite-lived goodwill was as follows by segment (in thousands): Commercial Public Sector Canada United Kingdom Total Balance at December 31, 2018 $ 69,735 $ 8,322 $ 4,609 $ 4,560 $ 87,226 Foreign currency translation — — 193 (22 ) 171 Balance at June 30, 2019 $ 69,735 $ 8,322 $ 4,802 $ 4,538 $ 87,397 |
Schedule of Amounts Recorded for Intangible Assets | The following table sets forth the amounts recorded for intangible assets (in thousands): Weighted At June 30, 2019 At December 31, 2018 Useful Lives Gross Accumulated Net Gross Accumulated Net Patent, trademarks, trade names & URLs 5 $ 5,311 (1) $ 1,740 $ 3,571 $ 5,304 (1) $ 1,502 $ 3,802 Customer relationships 14 13,558 10,048 3,510 13,460 9,358 4,102 Non-compete agreements 5 237 174 63 2,087 1,888 199 Total intangible assets $ 19,106 $ 11,962 $ 7,144 $ 20,851 $ 12,748 $ 8,103 (1) Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Operating Leases | The following tables provide detailed information about our operating leases (in thousands): Lease assets and liabilities Balance Sheet Classification At June 30, 2019 ROU assets “Other assets” $ 32,312 Current lease liabilities “Accrued expenses and other current liabilities” $ 4,694 Non-current lease liabilities “Other long-term liabilities” 31,212 Total lease liabilities $ 35,906 Operating lease costs Income Statement Classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Lease costs “Selling, general and administrative expenses” $ 1,569 $ 3,133 Cash paid for operating lease liabilities 1,499 3,063 |
Summary of Operating Lease Liabilities | At June 30, 2019 Weighted-average remaining lease term 8 years Weighted-average discount rate 3.94 % |
Schedule of Maturities of Operating Lease Liabilties | The following table sets forth maturities of our operating lease liabilities under ASC 842 (in thousands): At June 30, 2019 Remainder of 2019 $ 3,100 2020 5,751 2021 5,700 2022 5,703 2023 4,846 Thereafter 17,339 Total 42,439 Less: Imputed interest (6,533 ) Total lease liabilities $ 35,906 |
Schedule of Future Minimum Lease Payments Under Non-Cancelable Leases | The following table sets forth future minimum lease payments under non-cancelable leases under ASC 840 at December 31, 2018 (in thousands): 2019 2020 2021 2022 2023 Thereafter Total Operating lease obligations $ 6,765 $ 6,186 $ 6,088 $ 5,180 $ 4,386 $ 21,969 $ 50,574 Capital lease obligations 1,325 1,041 571 259 224 — 3,420 Total minimum payments $ 8,090 $ 7,227 $ 6,659 $ 5,439 $ 4,610 $ 21,969 $ 53,994 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table sets forth our outstanding debt balances (in thousands): At June 30, 2019 At December 31, 2018 Revolving credit facility, LIBOR plus 1.50%, maturing in March 2021 $ 77,104 $ 88,399 Note payable, LIBOR plus 1.50%, maturing in March 2021 (1) 8,349 9,243 Note payable, LIBOR plus 1.50%, maturing in March 2021 (2) 1,470 1,628 Note payable, greater of 2% or LIBOR plus 2.15%, maturing in April 2022 (3) 4,108 4,207 Note payable, LIBOR plus 2.25%, maturing in January 2022 (4) 3,565 3,679 Note payable, Prime plus 0.25% or LIBOR plus 2.125%, maturing in March 2021 (5) 6,334 6,489 Note payable, Prime plus 0.375% or LIBOR plus 2.25%, maturing in March 2024 (6) 17,093 7,308 Note payable, LIBOR plus 3.2%, maturing in May 2025 219 236 Total 118,242 121,189 Less: Total current debt 80,673 91,682 Total non-current debt $ 37,569 $ 29,507 (1) Refer to discussion below regarding the sub-line secured by the building in Santa Monica, California. (2) Refer to discussion below regarding the sub-line secured by the building in Woodridge, Illinois (3) Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Irvine, California. (4) Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Lewis Center, Ohio. (5) Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in New Albany, Ohio. (6) Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in El Segundo, California. |
Schedule of Maturities of Outstanding Debt | The following table sets forth the maturities of our outstanding debt balances as of June 30, 2019 (in thousands): Remainder of 2019 2020 2021 2022 2023 Thereafter Total Total long-term debt obligations $ 1,842 $ 3,562 $ 13,684 $ 7,334 $ 727 $ 13,989 $ 41,138 Revolving credit facility 77,104 — — — — — 77,104 Total $ 78,946 $ 3,562 $ 13,684 $ 7,334 $ 727 $ 13,989 $ 118,242 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Basic and Diluted Earnings Per Common Share | |
Schedule of Reconciliation of Amounts Used in Basic and Diluted EPS Computation | A reconciliation of the amounts used in the basic and diluted EPS computation was as follows (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Numerator: Net income $ 8,202 $ 7,883 $ 12,877 $ 10,694 Denominator: Basic EPS - Weighted average number of common shares outstanding 12,289 11,912 12,253 11,878 Dilutive effect of stock awards 953 347 958 267 Diluted EPS - Weighted average number of common shares outstanding 13,242 12,259 13,211 12,145 Net earnings per share: Basic $ 0.67 $ 0.66 $ 1.05 $ 0.90 Diluted 0.62 0.64 0.97 0.88 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information for Entity's Continuing Operations | Summarized segment information for our operations for the periods presented is as follows (in thousands): Commercial Public Canada United Kingdom Corporate & Consolidated Three Months Ended June 30, 2019 Net sales $ 431,339 $ 45,019 $ 51,902 $ 20,238 $ (172 ) $ 548,326 Gross profit 71,174 7,550 8,228 4,146 (139 ) 90,959 Depreciation and amortization expense(1) 1,165 77 195 83 1,438 2,958 Operating profit (loss) 25,550 2,967 1,379 (267 ) (16,760 ) 12,869 Three Months Ended June 30, 2018 Net sales $ 410,950 $ 74,712 $ 47,416 $ 13,512 $ (160 ) $ 546,430 Gross profit 70,147 10,377 7,378 2,672 (157 ) 90,417 Depreciation and amortization expense(1) 1,255 123 231 73 1,626 3,308 Operating profit (loss) 25,492 4,633 1,166 (1,102 ) (16,994 ) 13,195 Six Months Ended June 30, 2019 Net sales $ 859,867 $ 85,066 $ 99,095 $ 38,612 $ (325 ) $ 1,082,315 Gross profit 137,604 12,626 16,212 7,924 (293 ) 174,073 Depreciation and amortization expense(1) 2,416 179 385 161 2,952 6,093 Operating profit (loss) 48,195 3,108 2,932 (811 ) (32,128 ) 21,296 Six Months Ended June 30, 2018 Net sales $ 825,681 $ 130,774 $ 101,536 $ 31,585 $ (314 ) $ 1,089,262 Gross profit 135,995 16,401 15,739 6,187 (309 ) 174,013 Depreciation and amortization expense(1) 2,618 298 497 122 3,378 6,913 Operating profit (loss) 47,209 4,683 2,628 (1,394 ) (33,689 ) 19,437 (1) Primary fixed assets relating to network and servers are managed by the Corporate headquarters. As such, depreciation expense relating to such assets is included as part of Corporate & Other. |
Basis of Presentation and Des_2
Basis of Presentation and Description of Company (Details Narrative) - ReportableSegments | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 4 | |
Commercial Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue percentage | 79.00% | 79.00% |
Public Sector Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue percentage | 8.00% | 8.00% |
Canada Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue percentage | 9.00% | 9.00% |
United Kingdom [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue percentage | 4.00% | 4.00% |
New Accounting Standards and _3
New Accounting Standards and Accounting Policy (Details Narrative) $ in Thousands | Jun. 30, 2019USD ($) |
Other Assets [Member] | |
Operating lease ROU assets | $ 32,312 |
Other Long-term Liabilities [Member] | |
Lease obligations, non-current | 31,212 |
Accounting Standards Update 2016-02 [Member] | January 1, 2019 [Member] | |
Cumulative effect adjustment to retained earnings upon adoption of ASC 842 | |
Accounting Standards Update 2016-02 [Member] | January 1, 2019 [Member] | Other Assets [Member] | |
Operating lease ROU assets | 33,700 |
Accounting Standards Update 2016-02 [Member] | January 1, 2019 [Member] | Accrued Expenses and Other Current Liabilities [Member] | |
Lease obligations, current | 4,900 |
Accounting Standards Update 2016-02 [Member] | January 1, 2019 [Member] | Other Long-term Liabilities [Member] | |
Lease obligations, non-current | $ 32,300 |
Revenue (Details Narrative)
Revenue (Details Narrative) $ in Thousands | Jun. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Contracted revenue not yet recognized | $ 29,300 |
Percentage of revenue expected to be recognized over next 12 months | 60.00% |
Revenue - Schedule of Net Sales
Revenue - Schedule of Net Sales Disaggregated by Major Product Line and Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total net sales | $ 548,326 | $ 546,430 | $ 1,082,315 | $ 1,089,262 |
Hardware & Software Products [Member] | Consolidated [Member] | ||||
Total net sales | 502,071 | 503,513 | 992,084 | 1,001,317 |
Services [Member] | Consolidated [Member] | ||||
Total net sales | 46,255 | 42,917 | 90,231 | 87,945 |
Commercial [Member] | ||||
Total net sales | 431,339 | 410,950 | 859,867 | 825,681 |
Commercial [Member] | Hardware & Software Products [Member] | ||||
Total net sales | 396,805 | 381,515 | 793,839 | 763,284 |
Commercial [Member] | Services [Member] | ||||
Total net sales | 34,534 | 29,435 | 66,028 | 62,397 |
Public Sector [Member] | ||||
Total net sales | 45,019 | 74,712 | 85,066 | 130,774 |
Public Sector [Member] | Hardware & Software Products [Member] | ||||
Total net sales | 42,761 | 69,945 | 79,664 | 122,866 |
Public Sector [Member] | Services [Member] | ||||
Total net sales | 2,258 | 4,767 | 5,402 | 7,908 |
Canada [Member] | ||||
Total net sales | 51,902 | 47,416 | 99,095 | 101,536 |
Canada [Member] | Hardware & Software Products [Member] | ||||
Total net sales | 43,535 | 39,888 | 82,542 | 86,488 |
Canada [Member] | Services [Member] | ||||
Total net sales | 8,367 | 7,528 | 16,553 | 15,048 |
United Kingdom [Member] | ||||
Total net sales | 20,238 | 13,512 | 38,612 | 31,585 |
United Kingdom [Member] | Hardware & Software Products [Member] | ||||
Total net sales | 19,156 | 12,325 | 36,378 | 28,993 |
United Kingdom [Member] | Services [Member] | ||||
Total net sales | 1,082 | 1,187 | 2,234 | 2,592 |
Corporate & Other [Member] | ||||
Total net sales | (172) | (160) | (325) | (314) |
Corporate & Other [Member] | Hardware & Software Products [Member] | ||||
Total net sales | (186) | (160) | (339) | (314) |
Corporate & Other [Member] | Services [Member] | ||||
Total net sales | 14 | 14 | ||
Consolidated [Member] | ||||
Total net sales | $ 548,326 | $ 546,430 | $ 1,082,315 | $ 1,089,262 |
Revenue - Schedule of Change in
Revenue - Schedule of Change in Deferred Revenue Related to Contract with Customers (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($) | ||
Total [Member] | ||
Beginning balance at December 31, 2018 | $ 8,724 | |
Deferral of revenue | 19,437 | |
Recognition of deferred revenue | (20,191) | |
Foreign currency translation | 7 | |
Ending balance at June 30, 2019 | 7,977 | |
Current [Member] | ||
Beginning balance at December 31, 2018 | 7,966 | [1] |
Deferral of revenue | 19,232 | |
Recognition of deferred revenue | (20,090) | |
Foreign currency translation | 7 | |
Ending balance at June 30, 2019 | 7,115 | [1] |
Long-Term [Member] | ||
Beginning balance at December 31, 2018 | 758 | [2] |
Deferral of revenue | 205 | |
Recognition of deferred revenue | (101) | |
Foreign currency translation | ||
Ending balance at June 30, 2019 | $ 862 | [2] |
[1] | Presented as "Deferred revenue" on our consolidated balance sheets. | |
[2] | Presented as part of "Other long-term liabilities" on our consolidated balance sheets. |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense for intangible assets | $ 400 | $ 700 | $ 1,000 | $ 1,600 |
Estimated amortization expenses for intangible assets remainder of 2019 | 900 | 900 | ||
Estimated amortization expenses for intangible assets 2020 | 1,300 | 1,300 | ||
Estimated amortization expenses for intangible assets 2021 | 500 | 500 | ||
Estimated amortization expenses for intangible assets 2022 | 400 | 400 | ||
Estimated amortization expenses for intangible assets 2023 | 300 | 300 | ||
Estimated amortization expenses for intangible assets thereafter | $ 800 | $ 800 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Carrying Amounts of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Beginning balance at December 31, 2018 | $ 87,226 |
Ending balance at June 30, 2019 | 87,397 |
Total [Member] | |
Beginning balance at December 31, 2018 | 87,226 |
Foreign currency translation | 171 |
Ending balance at June 30, 2019 | 87,397 |
Commercial [Member] | |
Beginning balance at December 31, 2018 | 69,735 |
Foreign currency translation | |
Ending balance at June 30, 2019 | 69,735 |
Public Sector [Member] | |
Beginning balance at December 31, 2018 | 8,322 |
Foreign currency translation | |
Ending balance at June 30, 2019 | 8,322 |
Canada [Member] | |
Beginning balance at December 31, 2018 | 4,609 |
Foreign currency translation | 193 |
Ending balance at June 30, 2019 | 4,802 |
United Kingdom [Member] | |
Beginning balance at December 31, 2018 | 4,560 |
Foreign currency translation | (22) |
Ending balance at June 30, 2019 | $ 4,538 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Amounts Recorded for Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | ||
Gross Amount | $ 19,106 | $ 20,851 | |
Accumulated Amortization | 11,962 | 12,748 | |
Net Amount | $ 7,144 | 8,103 | |
Patent, Trademarks, Trade Names & URLs [Member] | |||
Weighted Average Estimated Useful Lives (years) | 5 years | ||
Gross Amount | [1] | $ 5,311 | 5,304 |
Accumulated Amortization | 1,740 | 1,502 | |
Net Amount | $ 3,571 | 3,802 | |
Customer Relationships [Member] | |||
Weighted Average Estimated Useful Lives (years) | 14 years | ||
Gross Amount | $ 13,558 | 13,460 | |
Accumulated Amortization | 10,048 | 9,358 | |
Net Amount | $ 3,510 | 4,102 | |
Non-Compete Agreements [Member] | |||
Weighted Average Estimated Useful Lives (years) | 5 years | ||
Gross Amount | $ 237 | 2,087 | |
Accumulated Amortization | 174 | 1,888 | |
Net Amount | $ 63 | $ 199 | |
[1] | Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Amounts Recorded for Intangible Assets (Details) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Trademarks [Member] | ||
Patents, trademarks and URLs of gross amount | $ 2,900 | $ 2,900 |
Leases (Details Narrative)
Leases (Details Narrative) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Operating leases, rent expense net of sublease income | $ 2,000 | $ 3,600 |
Land [Member] | ||
Operating lease term | 99 years | 99 years |
Minimum [Member] | ||
Operating lease term | 4 years | 4 years |
Operating lease renewal term | 3 years | 3 years |
Maximum [Member] | ||
Operating lease term | 20 years | 20 years |
Operating lease renewal term | 10 years | 10 years |
Leases - Schedule of Operating
Leases - Schedule of Operating Leases (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Total lease liabilities | $ 35,906 | $ 35,906 |
Selling, General and Administrative Expenses [Member] | ||
Lease costs | 1,569 | 3,133 |
Other Assets [Member] | ||
ROU assets | 32,312 | 32,312 |
Accrued Expenses and Other Current Liabilities [Member] | ||
Current lease liabilities | 4,694 | 4,694 |
Other Long-Term Liabilities [Member] | ||
Non-current lease liabilities | $ 31,212 | $ 31,212 |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Liabilities (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases [Abstract] | ||
Weighted-average remaining lease term | 8 years | 8 years |
Weighted-average discount rate | 3.94% | 3.94% |
Cash paid for operating lease liabilities | $ 1,499 | $ 3,063 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilties (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 3,100 |
2020 | 5,751 |
2021 | 5,700 |
2022 | 5,703 |
2023 | 4,846 |
Thereafter | 17,339 |
Total | 42,439 |
Less: Imputed interest | (6,533) |
Total lease liabilities | $ 35,906 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Lease Payments Under Non-Cancelable Leases (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
Operating lease obligations, 2019 | $ 6,765 |
Operating lease obligations, 2020 | 6,186 |
Operating lease obligations, 2021 | 6,088 |
Operating lease obligations, 2022 | 5,180 |
Operating lease obligations, 2023 | 4,386 |
Operating lease obligations, Thereafter | 21,969 |
Operating lease obligations, Total | 50,574 |
Capital lease obligations, 2019 | 1,325 |
Capital lease obligations, 2020 | 1,041 |
Capital lease obligations, 2021 | 571 |
Capital lease obligations, 2022 | 259 |
Capital lease obligations, 2023 | 224 |
Capital lease obligations, Thereafter | |
Capital lease obligations, Total | 3,420 |
Total minimum payments, 2019 | 8,090 |
Total minimum payments, 2020 | 7,227 |
Total minimum payments, 2021 | 6,659 |
Total minimum payments, 2022 | 5,439 |
Total minimum payments, 2023 | 4,610 |
Total minimum payments, Thereafter | 21,969 |
Total minimum payments | $ 53,994 |
Debt (Details Narrative)
Debt (Details Narrative) | 6 Months Ended | 20 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2019CAD ($) | Jun. 30, 2019GBP (£) | Jul. 07, 2016USD ($) | |
Note payable, variable interest rate basis | 3.95% | |||
Line of Credit [Member] | ||||
Availability under line of credit | $ 232,300,000 | |||
Channel Finance Facility [Member] | ||||
Availability under Channel Finance Facility | $ 35,000,000 | |||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | ||||
Maximum credit limit | 345,000,000 | |||
Debt maturity date | Mar. 19, 2021 | Mar. 19, 2021 | ||
Interest rate description of revolving credit | interest on outstanding balance under the Canadian Maximum Credit based on the Canadian Base Rate (calculated as the greater of CDOR plus one percentage point and the “prime rate” for Canadian Dollar commercial loans, as further defined in the Fifth Amended Loan Agreement) or at the election of the Borrowers, based on the CDOR Rate, plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (v) interest on outstanding UK balances based on LIBOR plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (vi) interest on outstanding balance under the Maximum Credit based on the Eurodollar Rate plus a margin, depending on average excess availability under the revolving line, ranging from 1.50% to 1.75%; and (vii) a monthly unused line fee of 0.25% per year on the amount, if any, by which the Maximum Credit, then in effect, exceeds the average daily principal balance of outstanding borrowings during the immediately preceding month. | interest on outstanding balance under the Canadian Maximum Credit based on the Canadian Base Rate (calculated as the greater of CDOR plus one percentage point and the “prime rate” for Canadian Dollar commercial loans, as further defined in the Fifth Amended Loan Agreement) or at the election of the Borrowers, based on the CDOR Rate, plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (v) interest on outstanding UK balances based on LIBOR plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; (vi) interest on outstanding balance under the Maximum Credit based on the Eurodollar Rate plus a margin, depending on average excess availability under the revolving line, ranging from 1.50% to 1.75%; and (vii) a monthly unused line fee of 0.25% per year on the amount, if any, by which the Maximum Credit, then in effect, exceeds the average daily principal balance of outstanding borrowings during the immediately preceding month. | ||
Percentage of unused line fee | 0.25% | 0.25% | ||
Fixed charge coverage ratio | In the event the FCCR covenant applies, the fixed charge coverage ratio is 1.0 to 1.0 calculated on a trailing four-quarter basis as of the end of the last quarter immediately preceding such FCCR triggering event date. | In the event the FCCR covenant applies, the fixed charge coverage ratio is 1.0 to 1.0 calculated on a trailing four-quarter basis as of the end of the last quarter immediately preceding such FCCR triggering event date. | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Santa Monica Real Properties [Member] | ||||
Sub-lines revolving credit facility | 12,500,000 | |||
Principal amortization value | 149,083 | |||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Woodridge Real Properties [Member] | ||||
Sub-lines revolving credit facility | 2,200,000 | |||
Principal amortization value | $ 26,250 | |||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | LIBOR Rate [Member] | Minimum [Member] | ||||
Note payable, variable interest rate basis | 1.50% | 1.50% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | LIBOR Rate [Member] | Maximum [Member] | ||||
Note payable, variable interest rate basis | 1.75% | 1.75% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Eurodollar [Member] | Minimum [Member] | ||||
Note payable, variable interest rate basis | 1.50% | 1.50% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Eurodollar [Member] | Maximum [Member] | ||||
Note payable, variable interest rate basis | 1.75% | 1.75% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Canadian Dollar [Member] | ||||
Sub-line available in Canadian and UK under maximum credit | $ 40,000,000 | |||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Canadian Dollar [Member] | Minimum [Member] | ||||
Note payable, variable interest rate basis | 1.50% | 1.50% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | Canadian Dollar [Member] | Maximum [Member] | ||||
Note payable, variable interest rate basis | 1.75% | 1.75% | ||
Revolving Credit Facility [Member] | Fifth Amended Loan Agreement [Member] | GBP [Member] | ||||
Sub-line available in Canadian and UK under maximum credit | £ | £ 25,000,000 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Total | $ 118,242 | $ 121,189 | |
Less: Total current debt | 80,673 | 91,682 | |
Total non-current debt | 37,569 | 29,507 | |
Revolving Credit Facility, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | |||
Total | 77,104 | 88,399 | |
Note Payable, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | |||
Total | [1] | 8,349 | 9,243 |
Note Payable, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | |||
Total | [2] | 1,470 | 1,628 |
Note Payable, Greater of 2% Or LIBOR Plus 2.15%, Maturing in April 2022 [Member] | |||
Total | [3] | 4,108 | 4,207 |
Note Payable, LIBOR Plus 2.25%, Maturing in January 2022 [Member] | |||
Total | [4] | 3,565 | 3,679 |
Note Payable, Prime Plus 0.25% or LIBOR Plus 2.125%, Maturing in March 2021 [Member] | |||
Total | [5] | 6,334 | 6,489 |
Note Payable, Prime Plus 0.375% Or LIBOR Plus 2.25%, Maturing in March 2024 [Member] | |||
Total | [6] | 17,093 | 7,308 |
Note Payable, LIBOR Plus 3.2%, Maturing in May 2025 [Member] | |||
Total | $ 219 | $ 236 | |
[1] | Refer to discussion below regarding the sub-line secured by the building in Santa Monica, California. | ||
[2] | Refer to discussion below regarding the sub-line secured by the building in Woodridge, Illinois | ||
[3] | Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Irvine, California. | ||
[4] | Relates to a seven-year note, with a 25 year straight-line monthly principal amortization, secured by real property in Lewis Center, Ohio. | ||
[5] | Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in New Albany, Ohio. | ||
[6] | Relates to a five-year note, with a 25 year straight-line monthly principal amortization, secured by real property in El Segundo, California. |
Debt - Schedule of Outstandin_2
Debt - Schedule of Outstanding Debt (Details) (Parenthetical) | 6 Months Ended |
Jun. 30, 2019 | |
Note payable variable interest rate basis | 3.95% |
Revolving Credit Facility, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2021 |
Note Payable, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2021 |
Note Payable, LIBOR Plus 1.50%, Maturing in March 2021 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2021 |
Note Payable, Greater of 2% Or LIBOR Plus 2.15%, Maturing in April 2022 [Member] | Maximum [Member] | |
Note payable variable interest rate basis | 2.00% |
Note payable maturity date | April 2022 |
Note Payable, Greater of 2% Or LIBOR Plus 2.15%, Maturing in April 2022 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.15% |
Note payable maturity date | April 2022 |
Note Payable, LIBOR Plus 2.25%, Maturing in January 2022 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.25% |
Note payable maturity date | January 2022 |
Note Payable, Prime Plus 0.25% or LIBOR Plus 2.125%, Maturing in March 2021 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.125% |
Note payable maturity date | March 2021 |
Note Payable, Prime Plus 0.25% or LIBOR Plus 2.125%, Maturing in March 2021 [Member] | Prime Rate [Member] | |
Note payable variable interest rate basis | 0.25% |
Note payable maturity date | March 2021 |
Note Payable, Prime Plus 0.375% Or LIBOR Plus 2.25%, Maturing in March 2024 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.25% |
Note payable maturity date | March 2024 |
Note Payable, Prime Plus 0.375% Or LIBOR Plus 2.25%, Maturing in March 2024 [Member] | Prime Rate [Member] | |
Note payable variable interest rate basis | 0.375% |
Note payable maturity date | March 2024 |
Note Payable, LIBOR Plus 3.2%, Maturing in May 2025 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 3.20% |
Note payable maturity date | May 2025 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Outstanding Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Total | $ 118,242 | $ 121,189 |
Total [Member] | ||
Remainder of 2019 | 78,946 | |
2020 | 3,562 | |
2021 | 13,684 | |
2022 | 7,334 | |
2023 | 727 | |
Thereafter | 13,989 | |
Total | 118,242 | |
Total Long-Term Debt Obligations [Member] | ||
Remainder of 2019 | 1,842 | |
2020 | 3,562 | |
2021 | 13,684 | |
2022 | 7,334 | |
2023 | 727 | |
Thereafter | 13,989 | |
Total | 41,138 | |
Revolving Credit Facility [Member] | ||
Remainder of 2019 | 77,104 | |
2020 | ||
2021 | ||
2022 | ||
2023 | ||
Thereafter | ||
Total | $ 77,104 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits | $ 300 | $ 300 | $ 300 | ||
Unrecognized interest or penalties | |||||
Accrued interest and penalties |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Aug. 31, 2017 | Apr. 30, 2015 | Sep. 30, 2012 | Jun. 30, 2019 | Jun. 30, 2019 | Oct. 31, 2008 | |
Equity [Abstract] | ||||||
Maximum value authorized under discretionary common stock repurchase program | $ 10,000 | |||||
Revised maximum value authorized under discretionary common stock repurchase program | $ 40,000 | $ 30,000 | $ 20,000 | |||
Number of common stock shares repurchased during period | 0 | 0 | ||||
Amount available to repurchase the stock | $ 2,500 | $ 2,500 | ||||
Dividend payment description | We have never paid cash dividends on our capital stock and our credit facility prohibits us from paying any cash dividends on our capital stock. Therefore, we do not currently anticipate paying dividends; we intend to retain any earnings to finance the growth and development of our business. |
Earnings Per Share (Details Nar
Earnings Per Share (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Basic and Diluted Earnings Per Common Share | ||||
Common stock excluded from calculation of diluted EPS | 52,000 | 988,000 | 50,000 | 775,000 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Amounts Used in Basic and Diluted EPS Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Basic and Diluted Earnings Per Common Share | ||||||
Net income | $ 8,202 | $ 4,675 | $ 7,883 | $ 2,811 | $ 12,877 | $ 10,694 |
Basic EPS - Weighted average number of common shares outstanding | 12,289 | 11,912 | 12,253 | 11,878 | ||
Dilutive effect of stock awards | 953 | 347 | 958 | 267 | ||
Diluted EPS - Weighted average number of common shares outstanding | 13,242 | 12,259 | 13,211 | 12,145 | ||
Earnings per share: Basic | $ 0.67 | $ 0.66 | $ 1.05 | $ 0.90 | ||
Earnings per share: Diluted | $ 0.62 | $ 0.64 | $ 0.97 | $ 0.88 |
Segment Information (Details Na
Segment Information (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Segment Reporting [Abstract] | ||
Total assets | $ 775,903 | $ 720,950 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information for Entity's Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
Segment Reporting Information [Line Items] | |||||
Net sales | $ 548,326 | $ 546,430 | $ 1,082,315 | $ 1,089,262 | |
Gross profit | 90,959 | 90,417 | 174,073 | 174,013 | |
Operating profit (loss) | 12,869 | 13,195 | 21,296 | 19,437 | |
Commercial [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 431,339 | 410,950 | 859,867 | 825,681 | |
Gross profit | 71,774 | 70,147 | 137,604 | 135,995 | |
Depreciation and amortization expense | [1] | 1,165 | 1,255 | 2,416 | 2,618 |
Operating profit (loss) | 25,550 | 25,492 | 48,195 | 47,209 | |
Public Sector [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 45,019 | 74,712 | 85,066 | 130,774 | |
Gross profit | 7,550 | 10,377 | 12,626 | 16,401 | |
Depreciation and amortization expense | [1] | 77 | 123 | 179 | 298 |
Operating profit (loss) | 2,967 | 4,633 | 3,108 | 4,683 | |
Canada [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 51,902 | 47,416 | 99,095 | 101,536 | |
Gross profit | 8,228 | 7,378 | 16,212 | 15,739 | |
Depreciation and amortization expense | [1] | 195 | 231 | 385 | 497 |
Operating profit (loss) | 1,379 | 1,166 | 2,932 | 2,628 | |
United Kingdom [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 20,238 | 13,512 | 38,612 | 31,585 | |
Gross profit | 4,146 | 2,672 | 7,924 | 6,187 | |
Depreciation and amortization expense | [1] | 83 | 73 | 161 | 122 |
Operating profit (loss) | (267) | (1,102) | (811) | (1,394) | |
Corporate & Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | (172) | (160) | (325) | (314) | |
Gross profit | (139) | (157) | (293) | (309) | |
Depreciation and amortization expense | [1] | 1,438 | 1,626 | 2,952 | 3,378 |
Operating profit (loss) | (16,760) | (16,994) | (32,128) | (33,689) | |
Consolidated [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 548,326 | 546,430 | 1,082,315 | 1,089,262 | |
Gross profit | 90,959 | 90,417 | 174,073 | 174,013 | |
Depreciation and amortization expense | [1] | 2,958 | 3,308 | 6,093 | 6,913 |
Operating profit (loss) | $ 12,869 | $ 13,195 | $ 21,296 | $ 19,437 | |
[1] | Primary fixed assets relating to network and servers are managed by the Corporate headquarters. As such, depreciation expense relating to such assets is included as part of Corporate & Other. |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Mar. 09, 2019USD ($) |
Ovex Technologies, Ltd [Member] | En Pointe Technologies Sales, Inc [Member] | |
Gain contingency unrecorded amount | $ 990,586 |