PCM CEO: Acquisitions Have Drawn Vendors’ Attention

After making three significant acquisitions last year, PCM is getting more attention from its vendor partners, according to CEO Frank Khulusi.

On a conference call Thursday following PCM's quarterly earnings release, Khulusi said the company had recently held its national sales meeting, where it brings together sales associates and vendors. This year, he said the number of vendor representatives in attendance reached a record, and they were showing their support.

The El Segundo Calif.-based solution provider, - No. 29 on CRN's 2015 Solution Provider 500 list - reported that 53 percent of its business is done with products and services from Microsoft, Apple, Dell, HP, Inc., Cisco, Lenovo and Hewitt Packard Enterprise.

[Related: Blockbuster Deal: PCM Buys North America Systemax B2B Business, TigerDirect Brand]

"The common word has been that they - the vendors - really believe in us and are willing to invest at levels they haven't historically in order to ensure our success going forward," he said. Khulusi added that because his company does so much work in the SMB market, PCM is an important partner for those vendors.

"The partners very much care about the SMB market because it is a very hard market to get into," he said.

In 2015, PCM acquired Microsoft licensing partner En Pointe for $15 million, Canadian SMB provider Acrodex for $21.5 million and the North American business-to-business division of Systemax for $14 million, opening the door for the company to open its first offices in Canada, helping the company outpace its competitors as well as the industry, according to Khulusi.

In the fourth quarter alone, PCM President Jay Miley said, the company grew its software category by more than 120 percent, its services category by 77 percent and its notebook category 21 percent, reaching a record revenue of $482.2 million. That was up 4 percent over the fourth quarter of 2014. Meanwhile, PCM reported record earnings of $63.1 million, a jump of 26 percent.

Khulusi said the earnings were particularly impressive because the sales contribution of its Systemax acquisition, which included TigerDirect, were "insignificant."

He added that, thanks to the on-boarding costs and the rapid pace of the three acquisitions (within seven months), PCM was forced to delay cost-savings consolidation actions until the first quarter of 2016.

However, moving forward, he said PCM is in a great place, having completed much of the synergistic moves and cost savings activities already in February, saving the company about $2.5 million per quarter.

Moving forward, Khulusi said he expects 2016 to be a "banner year" for PCM, predicting that the company will boost sales with its newly added and soon-to-be integrated acquisitions up to $2.2 billion, representing growth of 32 percent over 2015.

"We are much bigger force now in all aspects," he said. "We’ve really significantly strengthened our public sector business, we’ve strengthened our SMB business, and we’ve strengthened our enterprise business. And we now market into Canada, all in one swoop."