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spk_0: welcome to the scans or quarterly earnings conference call oh i have been placed in a listen only mode until the question and answer session great call is being recorded if anyone has any objection to me disconnected this time our to turn the goal of the marriage injury vice president treasure and investor relations yet you may begin
spk_1: good afternoon and thank you for joining us join a male the call today or mike bauer or chairman and ceo john out or cheap revenue officer and steve jones or chief financial officer we will review our operating results for the quarter and then take your question we posted a cfl commentary that accompany company these are comments and webcast an investor relations section of our website let me remind you that certain statements and or preferably in the cfl commentary and on the call or forward looking statements these segments are subject to risks and uncertainties that could cause actual results to differ materially from such statements these risks and uncertainties include but are not limited to those factors identified in earnings release we put out today and and scale forces form can care for the year ended june thirtieth twenty twenty as filed with the fcc any forward looking statements represent argues only as of today and should not be relied upon as represent interview use as have any subsequent day go forth exclaims any duty to update in a forward looking statements to reflect actual results or changes in expectations except if required by law during our call we will discuss both death and non gaap result and have provided reconciliation between if a male in the cfl commentary in in or preferably these records fully a synth also can be found on our website and have been filed with her form a care i'll now turned the call over to mike
spk_2: thanks marion thanks everyone for join up today while school we highlighted that twenty twenty one is a year for focus execution and growth as demonstrated by are strong third quarter results we're excited about the foundation for growth we have built in a market growth opportunities third we are helping our channel partners accelerate their digital transformation over the last four years we've been transforming our business to enable failed partners to deliver industry leading solutions and respond to the many as a service ways in customers prefer to acquire technologies secondly the hybrid office in work anywhere trim provide opportunities for are you can see caf cloud enabled in point in connectivity third we are well positioned the mobility opportunities in markets such as retail hospitality grocery manufacturing and warehousing and a final opportunity to highlight is security both physical security with video surveillance and cyber security with the burglar excellent performance by our employees drove the achievement of a three point four five percent non gap operating margin and a thirteen point six percent return on investment that the capital our employees had done a remarkable job supporting our channel partners with focus execution and growth i will now turn the color but john to discuss our business performance for the core
spk_3: like mike i'm excited by the energy and momentum we're seeing in the business as evidenced by the broad base performance we delivered and two three
spk_4: our customers supplier relationships are strong and as a result we continue to deliver joint success or employees continue to inspire me with their resilience customer focus and ability to execute in our barcode networking and security segment were encouraged by the demand recovery across our technologies led by growth in mobility self checkout video surveillance and networking solutions we had record sales of mobility products delivery forty two percent year over year growth large deal supporting the mobile everywhere trend including warehousing and logistics curbside pick up an ecommerce drove our growth for video surveillance we deliver double digit growth and earthy strong demand as any customers open and stalled projects comments we're also seeing a stronger need an application of outdoor surveillance systems and cameras to support both public safety requirements and the increase in exterior curbside pick up or payments business which has higher margins from service offerings wrapped around hardware increase thirteen percent quarter over quarter supported by the reopening of the economy within our communications and services segment we continue to see growth and expansion or growth or video audio and collaboration products these solution stacks fueled by the ship the cloud our neighboring the hybrid workplace to support work from anywhere collaboration and huddle room technology refreshes and applications across education for hybrid learning thanks to the strong effort of our communication and collaboration the boards and integrated integrators we had impressive sales growth in next generation cameras video bars displays headsets microphones and control panels were encouraged by the increasing demand and appreciate eight are strong partnerships with leading collaboration suppliers in brazil strong financial performance continued with strength and large deals expanded margin and impressive returns on working capital we experience double digit growth across barcode and mobility networking and digital workplace solutions in addition to it's successor growth hardware solutions are business in brazil continues to build outstanding momentum across both seth and clouds
spk_5: lucius
spk_4: in us continues to be key recurring revenue growth opportunity fourth or are jealous of business grew twelve percent year over year with even faster growth for unified communications as a service at thirty six percent and contacts enters a service at sixty seven percent we see strength in our intelligence is business as our customers continue with their workload migrations to the cloud we are encouraged by the accelerated adoption of the agency model by the var community since or two thousand and sixteen acquisition as witnessed by the sixty nine percent year over year growth in new supplier billings through vars in the last year we have increased or investment in sales support engineering resources digital training technical certifications and a nobleman tools and technologies to support our partner community and ensure their continued success i'd like to recognize the outstanding efforts of our teams this past quarter as they were closely with our suppliers to minimize the impact of supply chain challenges for our customers we are experiencing increase lead times or growth most of our technology and anticipate that it will continue through the fall and finally key to our mission to being at the center of the solution delivery channel we continue to create an innovate on new opportunities for our partners to grow during the third quarter we launched scan sources discover opportunity series which showcase growth opportunities in areas of vertical expertise including grocery healthcare education government manufacturing this is an ongoing program featuring vertical thought leadership content blogs web seminars and events panel discussions and podcast the discuss ver opportunity series will enable all routes to market to drive growth and incorporates ideas and solutions for both upfront revenue as well as recurring revenue and services now steve will take you through the financial results
spk_6: thanks john as might mentioned we're very pleased with the financial results for a quarter and very proud of our employees who continue to execute and deliver value to our channel partners
spk_4: for que three or profits grew faster than sales we expanded both are gross profit and operating profit margins and gain operating leverage on her as the an expensive our third quarter net felt seven hundred and thirty million dollars were inline with our historical seasonality which was where we expected entering the quarter third quarter revenues were down to percent year over year or flat year over year on a constant currency our growth profit group four percent year over year to eighty eight million dollars gross profit margins increased to twelve point one percent the higher gross profit margins reflect higher vid yourself program achievement a more favorable self next and higher than normal margins for brazil
spk_6: or non get as una expenses for the quarter of five or fifty nine point eight million dollars decline six point seven million dollars or ten percent year over year
spk_4: realized the quarterly impact at the expense reduction plan we announced in july we will add strategic headcount for and tell us as business and in other areas with growth opportunities
spk_6: for fiscal twenty twenty one we estimate the effective tax rate to range from twenty eight point two five percent to twenty nine point two five percent reflecting a higher impact from non deductible tax items and geographic mix now turning to the balanchine cashflow cash flow from operations consume sixty million dollar for the quarter mainly from working capital investments to keep inventory level aligned with are anticipated customer demand for the trailing twelve months ended march thirty first twenty twenty one we generated operating cash flows of one hundred and twenty nine million dollars
spk_4: year over year we reduced working capital investment by seventy four million dollars a fourteen percent year over year decline and street our balance sheet
spk_2: huge three dsl came in at sixty three days versus a previous year sixty one days with much of the increase due to the timing of ourselves in the quarter
spk_6: our third quarter inventory turns a five point eight times are in line with are expected range on march thirty first twenty twenty one we had cash and cash equivalents of forty nine million dollars and that of one hundred and ninety nine million dollars or net leverage total of broccoli one point seven times trailing twelve months adjusted ebitda which is within our targeted range i'd laugh now like to turn the call back over to my for closing comment
spk_2: with was another quarter of strong execution by or employees worldwide and it gives me great confidence in our strategic plan to drive probable growth we will now open it up or questions
spk_0: if you'd like to ask the question that this time please stop the star than the number one t are your thoughts on telephone to withdraw your question press the pound can again on installed and one
spk_7: as the coastal town
spk_0: i first question comes from adam ten donald woman joan
spk_8: hi this is catherine hotly on for adam
spk_0: just wondering as inflation and price increases ripple through throughout the economy and especially through this industry can you please talk about how inflation generally flows through your financial model and what are you observing from customer behavior in areas where priced has increased thus far and should we may be seen margin improvement for skin force as
spk_9: as as unfold
spk_2: hey cavernous mike let me let me try take a shot at that it is starkly and distribution there's not a lot of impact on inflation in the near term me we basically have our prices said in the marketplace by suppliers and it's suppliers dictate what the value proposition is in general for everyone in the distribution supply chain so at this point obviously as certain expenses go up for suppliers we expected they will pass those through over time
spk_10: well we don't view that is a near term i'm
spk_2: item that can affect our business
spk_0: okay that's good to hear and then also you have to significant competitors that are merging of the next six months what's your reaction to this and what does it need for your company
spk_2: well they for the question but we don't comment on our competitors strategic plans for their actions for will let them speak for themselves but thank you for the question
spk_0: hi next question comes and can you tell somebody kills research
spk_11: getting got a i graduations on the proper group a quarter of the a micro john just try to reconcile i guess your performance with some of your largest vendors and others who saw a lot greater growth and the revenue my the score keeper of can either that more cutter context about the i guess you guys not keeping up perhaps their revenue growth
spk_12: this quarter
spk_2: i keep if mike i'll take shot at birth again thanks for the up kind comments on the margins you know we have probably a mistake a stab at a your job five hundred suppliers of all sizes we have a a group of about say fifteen and a probably eighty percent of our revenue and i would say we look very closely at market share with in that top fifteen on and we continue to see very strong result for we sit down with those suppliers and say how are we doing in the channel and in the part of the channel that we compete and so sometimes there's confusion about how a vendor supplier or is doing and yet some of the business that they're doing well and maybe if not a piece of business that goes through to tier distribution so with where we choose to compete and can compete we've not seen that happen we're actually increasing our market share with those key suppliers
spk_11: canada pressure in i'm not a guy who later to supply chain a challenges you say again i'll get a few things wanted you can give perhaps would have more color in terms of our if it's one area or know your seymour the challenges work for shouted are just go vs you're finished product and and five army in all the impact that had on the current quarter results and in a war that profound impact on the results for the rest of the year
spk_4: a gateway for the question and death i think you you're hurting the in my prepared remarks that the as it relates to supply chain and lead times we have been affected
spk_3: like everybody else and it's that you know if the same as yours in terms of for
spk_4: a shipping delays and also work ships right hip shortages gum we we actually did not see a big impact and que three and thanks for the strong work that are you know supply chain game is doing in conjunction with suppliers we feel that the impact in this quarter will be manageable and minimal
spk_13: great thanks for hear it
spk_0: as a reminder that install and warm if you'd like to ask a question of this time or next question comes on krishna get it's what said eddie
spk_14: and adnan thanks for taking the call and a the questions and no could rather nice quarter with
spk_4: one question a last time you a guy like pos portal and in just that you're expecting that to underperform to just talk about may be held up from them a quarter of an expectation is going forward and helmets are perform next yeah great thanks for the question
spk_3: we were we were pleased with pos portal and their performance
spk_15: in the quarter and maybe more importantly we were pleased with the signs of reopening of the economy and main so we're looking for a rep
spk_16: you know positive side the hip
spk_14: ah in it
spk_17: the and a good be highlighted the prophet of our come around a brazil is that a sustainable number and can you talk about me the competitive landscape
spk_3: in that environment and install pardon sparkman
spk_4: yeah another good question you know brazil they had another great quarter and they're demonstrating really strong consistency they are absolutely capitalizing on things like the digital transformation that were saying the happening in brazil and i would pay up i think one of the things that driving yeah their performance the most is we're seeing real synergies from them combining two companies if you remember brazil really is a
spk_14: collection of see say which was the barcode business and then network one which was more of a networking and can i t computer company and so bringing those two company together has really helped drive consistency and performance and healthier margins ah inconvenience talk what the outlook burn i can kill a money is that market many of napoleon as environment
spk_6: women to collaborate with and know that dragons well
spk_11: yeah good afternoon christmas is steve jones thanks for the comment in the question i would say that we're we're still open to any opportunities for sure as we look forward you know it's going to just be that have to be the right fit and the right opportunity for us but certainly would be on our our on our strategic plan
spk_6: and then i guess this the and thing about that next quarter the man trans or ex sorry i made mr a commentary on the quarter of a worker expect i guess with any expectation for next quarter in terms of the man from them and nice in atlanta yatra thanks for the question rashly not going to go guidance for queue for at that point
spk_11: you know we just i'm not in a position to do that right now
spk_0: kurt andersen think to my questions and good luck to go thank you
spk_11: i can model stalled on one of the questionable time we'll follow up from the line ft tell them the falcons research
spk_4: a guy fit the profile of here on talking more about the calluses business at ability to get poll for a some more business and i pick out what are you guys know as college i care whether your talked about how are your thing new supplier going through the bars the sixty nine percent for i perhaps with them or contacts a real world examples of alec and tells him dr from new visitor of ours yeah keep great question and this is an area of real excitement for us if you remember back when nam when we made the acquisition of in tell us it was always one plus one had equal three or more and we are now seeing really strong at evidence the of not only greater recruitment but greater participation by the bar community
spk_11: in revenue growth and and death apply an appellant so we're we're excited about what we're seeing their and them you know looking forward to ah
spk_3: really doubling down on the effort to you know continue taking good care of our agents but also continuing to grow the war population the participates in know the agency model
spk_4: and that coming through better education or training classes or hurry that able to engage them better well it's and if the number things it's it's sad the better education you know our cloud university helps them with their training it continued innovation around our tools and technologies
spk_2: but i'll also you know we've invested in and tell us and we will continue to invest in intelligence in terms of account managers and technical resources and the resources that are necessary to health bars get enabled and get comfortable participating in though in those cloud market
spk_18: try and of and keep that might want more add on his arm what we've learned is the typical time for any new partner in that ecosystem whether they're a traditional agent telecom agent or var take some about three years where they actually seasick
spk_19: excess of this is taking his takes a lot longer than we were typically see recruiting new partners in our products and services business and so that's why we're seeing it happen now and it has been four and a half years since we acquired taluses so a slower than we would all like but the evidence is it's working and it will contain
spk_0: the to build going for we're excited about that
spk_2: great thanks
spk_0: okay that concludes today's question and answer session or like a former cop out to my fault because on oct
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