PCM CEO Sees Better Days Ahead With En Pointe Acquisition

PCM CEO Frank Khulisi is counting on his company's recent acquisition of En Pointe to help turn a 9 percent quarterly sales decline into double-digit sales growth.

"After you cycle through all the benefits of the acquisition and the sales that it brings to the table, we are optimistic that both entities together can start growing at 10 percent-plus one year out," said Khulusi in a conference call with Wall Street analysts Wednesday.

The upbeat assessment came after the $1.5 billion PCM posted a net loss of $3.5 million on a 9 percent sales decline, to $296 million, for its fiscal quarter ended March 31. That compares with earnings of $2.8 million on sales of $325.3 million in the year-ago quarter.

[Related: PCM To Acquire Assets Of En Pointe Technologies For $15 Million, Plus Earn-Outs]

Khulusi blamed the disappointing first quarter results on a sales restructuring and lower demand from some enterprise customers. But he said the company sees exciting times ahead as "we digest the En Pointe acquisition."

PCM, No. 27 on the CRN SP500, paid only $15 million for En Pointe, No. 42 on the CRN SP500 with $393 million in annual sales and 240 employees. But it's counting heavily on the En Pointe deal, which it completed April 1, to spark a transformation.

PCM, in fact, is betting that En Pointe's systems integration prowess will help turn the tide on a brutal IT product sales climate.

Khulusi painted a bleak picture of the current hardware sales environment.

"We're seeing it actually get tougher out there," he said, reflecting on the many hardware vendors struggling in the current IT market. "This is why we have the foresight to be embarking on this journey on making us more relevant from a solution perspective and changing the conversation with our customers to 'How can we save you money?' instead of 'How can we ship something to you?"

Khulusi sees significant cross-selling opportunities, particularly with advanced technologies as a result of the En Pointe acquisition. That advanced technologies offensive will start in the third quarter, he said.

"Right now we're just very busy absorbing what we've just acquired, which is our largest acquisition ever," he said.

Although it will take some time to leverage the En Pointe assets, Khulusi said, he expects earnings per share in the current quarter to be 20 to 24 cents. Furthermore, he said, for the 12-month period beginning in the second quarter, he expects earnings per share of $1. "We believe that PCM is better-positioned than ever," he said.

PUBLISHED APRIL 29, 2015