Datalink: Fiscal 1Q12 Financial Results

Datalink Corp. reported results for its first quarter that ended March 31, 2012. Revenues for the quarter increased 39% to a record $119.1 million compared to $85.7 million for the prior-year period.

GAAP Results
On a GAAP basis, the company reported net earnings of $2.2 million or $0.12 per diluted share for the first quarter ended March 31, 2012. This compares to net earnings of $1.7 million or $0.12 per diluted share in the first quarter of 2011. Earnings from operations for the first quarter of 2012 were $3.6 million or 3.0% of revenues, compared to $3.0 million or 3.5% of revenues in the first quarter of 2011.

Non-GAAP Results
Non-GAAP net earnings for the first quarter of 2012 were $2.9 million, or $0.17 per diluted share, compared to non-GAAP net earnings of $2.2 million, or $0.16 per diluted share, in the first quarter of 2011. Earnings from operations for the first quarter of 2012 were $4.9 million or 4.1% of revenues, compare to $3.8 million or 4.5% of revenues in the first quarter of 2011. A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.

The company’s results
for the quarter ended March 31, 2012 include:

• The additional 3.3 million common shares issued in connection with the follow-on stock offering in March 2011.
• The results of operations from the acquisition of Midwave Corporation, which was completed on October 3, 2011.

"Our first-quarter performance includes record revenues for both products and services. Our quarter-over-quarter revenues grew 39% and our quarterly sequential revenues grew 4% over the record revenues we achieved fourth quarter 2011. In addition, we experienced a 47% increase in the number of customers spending more than $1 million compared to first quarter 2011, and more than doubled the number of unified data center implementations with a corresponding 4000% increase in revenues to $16.6 million. Our networking and server revenues have increased from 9% to 16% of the product mix over the last year," said Datalink president and CEO Paul Lidsky. "These numbers are a clear indication that our strategy of expanding our portfolio of data center products and services to sell and support new integrated data center technologies is fueling strong growth for the company."

Outlook
Based on the company’s current backlog and sales pipeline, the company projects revenues of $125 million to $135 million for the second quarter of 2012 compared to $89.5 million for the second quarter of 2011. The company expects second quarter 2012 net earnings to be between $0.14 and $0.20 per diluted share on a GAAP basis, and net earnings of between $0.20 and $0.26 per diluted share on a non-GAAP basis. This compares to net earnings of $0.16 per diluted share and $0.19 per diluted share on a GAAP and non-GAAP basis, respectively, for the same period in 2011.

Non-GAAP earnings per share exclude the effect of acquisition accounting adjustments from the Incentra acquisition to deferred revenue and costs, integration and transaction costs related to acquisitions, stock-based compensation expense, amortization of intangible assets, and the related effects on income taxes. The company estimates this total effect will be approximately $0.06 per diluted share for the second quarter of 2012.