Insight Enterprises, Inc. (NSIT) Earnings Call Transcript & Summary

So good morning, everyone. I am Paul Coster. I cover IT hardware and intensive energy for JPMorgan. I'm joined on the call by my colleague, Paul Chung, who is taking on more and more responsibilities for coverage of IT hardware alongside me. Today is May 25. It is the JPMorgan 45th, I believe, Technology, Media and Communications Conference. And just before we start, I want to remind the audience that you are welcome to submit questions through the website, and I will do my best to incorporate them into the discussion. And today's discussion is with the CEO of Insight Technologies (sic) [ Insight Enterprises ], ticker: NSIT, Ken Lamneck. Thank you for joining us, sir. And also thanks, Glynis Bryan, CFO, for joining us today from Arizona.

Great. Thanks so much, Paul. It's exciting to be here, and we appreciate your time and certainly appreciate all the investor interest in Insight.

All right. Well, we appreciate your time as well.

So Ken, let's kick it off by perhaps providing an overview of the company.

Yes. Thank you. So we've been around for 32 years. So we've been sort of at the inception of technology. And we're -- basically, we're a global technology solution provider. So we provide IT solutions for our clients. We focus on a pretty broad client set, all segments of the clients except for really the consumers. So we focus on large enterprise customers, what we call corporate and commercial clients; as well as, of course, a full array of public sector clients, including Fed, state and local, K-12 and higher education client sets. And we do that globally. So the footprint, of course, being global, which is important to our client set, especially as they become -- the world becomes smaller. They're looking for people who could provide a solution for them, not only here in the U.S. as an example. But if they've got footprints in Europe or Asia, they need somebody that can do that as well. Certainly, on the software front, it makes a lot of sense where they can buy an enterprise agreement, as an example, in one location and then get service throughout the whole ecosystem of all the locations that they have. So being global is certainly a big important differentiator for Insight. The areas that we're focused on for technology would be around -- hopefully, our clients with what we call the modern workplace, what we call internally, Connected Workforce, that's really helping clients. And we saw that through COVID just how critical it was for clients to really have the right solutions at an end point level point of view; and then, of course, as the device itself, whether it be a desktop or a notebook as well as, of course, the associated software that helps them collaborate more effectively, such as what we're doing today. Then we help them, of course, with the data center. What we call the Cloud + Data Center Transformation that most clients are going through. And then for many clients, it's a hybrid world, meaning it's both a private infrastructure as well as a public infrastructure. Or some clients, of course, are immediately moving towards public infrastructure. It might be Microsoft Azure. It could be AWS. It could be a Google Cloud. It could be IBM. And so we help clients with that transformation. And we can do that really by looking and analyzing and assessing their workloads, determining which workloads make more sense economically to run in a public cloud versus a private cloud. And we can actually help them modernize those applications as well. And then the last space would be what we call Digital Innovation, which is really helping our clients all become more digital. So we've got a team of 1,500 software developers and architects that help our clients make this transformation as they go forward. So we don't know one client that's not trying to become more digital. So really, it's a very, very important space for our clients. So those are how we're positioned. When you look at some of the key metrics for us, we are a Fortune 500 company, Fortune 409 at this point. The new list will come out here, I guess, the end of this month. So we'll see where we rank there. But $8.3 billion in sales. You've seen good performance over our CAGR. Basically, that shows that from a growth point of view, 9% growth over the last 5 years EFO, 18% CAGR over the last 5 years and EPS at a 22% CAGR over the past 5 years. So that's sort of some of the key financial metrics.

So it's a big company. It's global. Its scope is very broad, $8 billion, $9 billion of revenues and counting. But it's a huge market as well, isn't it? I mean, can you perhaps provide us with context here?

Yes. And if I could, Paul, give you a sense and maybe just use the U.S. market as an example. So this year, $1.4 trillion will be spent in IT in the U.S. market. We address about $850 billion of that because we don't sell ERP systems like SAP. We don't sell CRM systems like Salesforce, and we don't sell some of the telecom products. So in the U.S., our market, if we had 100% market share, we do $850 billion. So it's a very, very big market with huge opportunities. And you can sort of extrapolate that out to Europe and Asia Pac as well to get a sense for what kind of size of an opportunity that exists. What's interesting in our business, Paul, as you well know, is that it's -- there's about probably the top 10 of us, the top 10 big players like ourselves, CDW and so forth, we basically have about 20% market share. So about 80% of the market of that $850 billion is still served by very, very small players, very localized. We do see the trending data that shows that we're growing much faster than those smaller players, and there's good data points out there that show that we're growing almost 2x. The big guys are growing almost 2x what the smaller players are. And we think that actually scale starts to really finally matter in this business where it's taken a long time. But things like subscription services, things like managed services, the IT platforms that you have to invest in far more sophisticated, when you talk about subscription billing and these cloud management platforms, when you talk about having the ability to do digital marketing. So the assets required to really drive the business going forward are very different than they were 10, 15 years ago, where you could be a local player just focused on Cisco, as an example, in a certain ZIP Code, you can have a very successful business. We see clients now are saying, no, it's more about the full data center and it's more about the services offering. So I do think that in the future, not that the small players will go away by any means, they're resilient companies, but they'll find different niches to play in. But I think the trends look pretty favorable for some of the larger-scale players in the space.

The pandemic accelerated a number of trends, right, which -- through digitization and edge and cloud and so on. And I imagine that accelerated the process of separating you from those smaller companies as well.

Yes. Very much so. And I think what we've seen during the pandemic, of course, is that people go to safety, people go to scale players. They're usually the winners in these kind of disruptive times. So I do think it -- certainly, we've all been impacted by COVID to different varying degrees. But I think the larger players certainly are very well capitalized, can weather these storms better and, I think, are well positioned to take advantage of what the future is. And IT, of course, has been pretty resilient, as you well know, during this time.

Yes. I listened to your description of the company, Ken. I was sort of struck by the fact that it's sort of customer-centric view of the world. In it being customer-centric, do you actually get a choice as to what products and services you actually deliver to your customer? And the reason I ask that is that some of those products and services are going to be growing like crazy and some are probably not, but you may not have the choice. Is that a true statement?

Yes. No, I would say that's exactly right, Paul. We -- of course, it stems from understanding our customer needs first and determine how we can help solve those. Because we can't solve everything in IT, right? It's way too -- we're pretty broad, but it's -- IT is much broader than that. So we have to focus where we can bring the most value to our clients and where they have the most needs. And that's what we focused on with these solution areas being around that modern workplace, help them to transition to a more modern infrastructure, whether it be a combination of private cloud/public cloud and then helping them, of course, becoming more digital that every client goes through. So those are still 3 pretty big areas. And then underlying that, of course, is all the supply chain optimization that we need to do because customers are looking for us to aggregate for them. As an example, we'll sell for our clients 6,000 different publishers and OEMs' products, to our clients, because our clients don't want to have to go out and buy these small vendors individually themselves. They're looking for us to also provide the aggregation point, which again, also plays into the fact of why the scaled players can handle that and they're probably better positioned to do that because there's so many variations. When you just look at security as an example, the number of solutions and the number that is out there is just astronomical. And our clients are looking for us to bring more sanity to that and to help them to the point where they could just buy from us, and then we can take care of the 50-or-so lines they might be buying from an aggregation point of view.

The other observation is that you do serve a lot of -- cover a lot of solutions and products and OEMs and so on. How do you develop the core competencies to support so many different things?

Yes. It's all about having the technical prowess because that's really where the differentiation is. If you looked at 30 years ago, you could be a reseller, meaning you could just resell the products and you didn't have to have the technical acumen. Today, that's no longer -- you've got to have the ability to help our clients technically. So when you look at the size of our organization, the number of technical resources has increased dramatically. So when you look at an organization of 11,000 people, you'll find that 4,000, 4,500 are in that technical area of the business really helping our clients sort through. Because the one thing about IT is it hasn't gotten simpler, right? It's gotten more challenging, more difficult. And so our customers are relying on us for the expertise that we have to really help them solve these problems.

And some of this expertise has been acquired. Some of it is recruited and homegrown. Is that correct? And do you have a kind of like an internal program to continuously upgrade?

Yes. Exactly, Paul. So yes, we've done quite a few acquisitions. As an example, when we saw the world moving more digital about 6 years ago, we determined that we didn't have the expertise in-house for that and it would have taken us way too long to build it. So we went on an acquisition process there and acquired basically companies like BlueMetal in the U.S., Cardinal Solutions in the U.S. The benefit to that was the fact that we could buy a company, not just BlueMetal with like 140 people, and we could scale it much quicker than they could. Because they were a small company, they had to worry about how much it costs to invest. So we could scale that. So as an example, we took that -- the 140 people and in 3 or 4 years' time, we tripled the size of that organization. So we got a great entity and then we were able to scale it. And the same thing with Cardinal. We did a similar thing in Australia with a company called Ignia, where they're primarily in Perth, Australia. We migrated them to Sydney and to Melbourne and then taking them now to Singapore, other areas, so we can take a core. Did a similar thing with -- in Europe with a company called Caase out of the Netherlands and then another one in France called vNext. So that's sort of what our formula has been is to take -- acquire these really highly skilled and talented organizations to really jump-start us into the business and then to use our researchers to expand them -- their footprint. And we'll continue to do that in these sort of tuck-in acquisitions as we know. And then scale still matters. So we still -- we've done a few scale acquisitions. Datalink was a data center company, about $700 million in revenue, but very technical organization. So that provided a sort of a combination of technical expertise as well as scale to the equation. And then most recently, as you know, the PCM acquisition, a public company, a few billion dollars in sales that we were able to develop and bring it to the organization from a scale point of view. And in many cases, what we're doing is we're acquiring clients. So very, very -- it's much quicker, of course, to acquire clients in some cases than try to grow that organically. As long as you can integrate them well into the company and make sure that you could take the costs out of the business to make that a much more economically viable entity. And we've actually been very successful at doing that, as you've seen with PCM.

So it's quite a complex sort of matrix of things you're bringing to the customer. I imagine that the sales organization is also -- and delivery service organizations are both matrix-organized. Is that -- first, what are the primary vectors, though, for getting out the product to the customer?

Yes. So it starts again with the sales organization. So we have what we call a client exec, a CE, a client exec who owns and sort of the quarterback for that relationship for the clients. And they're not going to have all the expertise they needed. So we have support teams that work in pods to support them technically for if they need help in the data center, if they need help in transforming the client digitally, if they need help in the client migrating to a modern workplace sort of scenario. They can pull all those technical resources as a pod to really work with the client. But it starts with the client exec being the center of it and managing those resources. So the caliber of those individuals is very high, as you can imagine, because they've got to manage a lot of complexity. They have to have a technical orientation as well to do that. But that's really where it drives. And then, of course, we have pretty significant teams that help them operationally on delivering all these solutions. And the service, of course, organization is quite large as well.

Okay. You -- as you said, your 6,000 products in your -- and solutions in your portfolio, that's an awful lot. But I imagine that there are certain major kind of clusters of technology that are driving your business at the moment. I'm thinking Microsoft Teams, and I'm thinking Cisco.

Exactly.

Can you give us some sense of what the big kind of chunks of investment that are happening in your world are at the moment?

Yes. It concentrates pretty quickly, Paul, as you mentioned. So the -- really the top 20 sort of partners that you could name, you named Microsoft, you named HP, Cisco, Lenovo, Adobe, VMware, Dell, of course, with EMC. You go down the list and you can -- Apple, of course, is in that. So if you took sort of the top 20, you'd find that that's actually a very high percentage of the revenue in IT, not just for Insight but in total. So it's very, very concentrated when you get to that stage. Now of course, there's a lot of supporting cast. That's where you get to the 6,000 that clients need that we have to help support them. But we've really focused -- and we have lots of resources around those top 20. And there's different programs where these vendors make sure we're technically certified. As an example, Azure is a big area of our business. So we have what we call a status of Azure Expert Services, which is a very high standard. There's probably, I think, 50 companies globally that have that designation where Microsoft has tested us. They continue to audit us every year to make sure we're meeting the standards so that we can be an extension of them to really help our clients in this migration to Azure. AWS has a similar-type program. Google has a similar-type program with their cloud program. Cisco has a program similar to that, HPE. So you go down the list, you get a sense for the requirements. Dell, of course, has that as well. So we've got to meet their certifications. But with that, we get a differentiation and we get a different status within that, which also typically equates to a better price point that we have for the investments that we've made. So we can get different discounting rates on the products that we sell to really help support that. So that's where the main focus for us, of course, is on those really top 20 solutions that our clients really need us to be experts in.

All right. So the last 18 months has just been a challenge for everyone, the enormity none of us could have ever imagined. And you and your industry actually have risen to the challenge tremendously well and helped get us through this with the working from home, remote learning and then subsequently now the return to work. Can you just talk us through what that whole dynamic translates into from your perspective?

Yes. So I think, Paul, it's a good perspective to have. So I think prior to -- if you were talking a year ago in February prior to COVID hitting and if we were to talk about saying, hey, the whole world is going to go into lockdown in the next month, what's that going to look like? I think we would have thought it was chaotic and it would have just been catastrophic. Pretty amazing how resilient people are. But also, technology was such a key part of the answer, right, to allow us to work remotely through things like Teams. 10 years ago, this would have been a very, very different scenario, right? We didn't have the bandwidth. We didn't have the devices. We didn't have the collaboration software like Zoom, like Teams, like Cisco Webex, to get through this. It would have been very, very challenging, very difficult if we were trying to do this just during conference calls. So technology really became at the forefront, and I think more and more companies started to realize just how critically important it is. And customers realize, now more than ever, they got [ a name ] before COVID, but now they've realized they have to become more digital. E-commerce has become a bigger part of everybody's business. So I think, if anything, what COVID's really done is it's really highlighted just how important technology is to the solutioning that's occurring. And there are some interesting dynamics that occurred within that. So as an example, in the school environment, it used to be for the average household, to have one PC was adequate, right, for the average household. Now many of us are different, where we've got different economic status where we can afford more -- we can have one PC per person per household. But with COVID, really with distance learning, it definitely created a requirement that every household had to have a PC for every person in that household. That led to a huge increase in Chromebooks and the technology required to do that because it's sort of like similar. I mean I don't know anybody who shares a phone, right? I mean that would be sort of like, you share a phone? Well, I think it's the same way now, you don't share your PC anymore. But prior to COVID, that was the case, you sort of shared a PC in the average household. No longer is that the case. So that led to just an increased -- a huge surge. The other dynamic that was interesting during COVID was the fact that prior to COVID, the footprint really was skewed -- weighed much more towards desktops. The environment was much more skewed to desktops, where about 55% was desktops, 45% was notebooks. Now of course, you're seeing it's 85% notebooks, 15% desktops. We actually like that because the average selling price is much higher for a notebook, more like 2 to 3x, the ASP. So we think that's a better situation. Also, the refresh cycle is much, much quicker for a notebook than it is a desktop. There's a lot more wear and tear. That's a more visible product, right? Whereas in the desktop, it was in the floor and nobody even knew really what was there. They thought their monitor was the computer. But that's really changed. So that, I think, is also what's increasing this acceleration on devices that continues to occur because the dynamic is now the ASP is higher as well as the refresh cycle is much higher as well. So we think that's continuing. And they're realizing that, boy, it's a critical device, right? Everybody -- if you're going to work remotely. And in the future, I think we're all in agreement that there's more of a hybrid sort of work environment going forward, maybe not 100% like we are in today. But there's going to be some elements to that, which we think is good news because offices don't go away, in our mind. Offices are going to continue. They're going to be more like collaboration zones, and there'll be a complement of people working from home, which is going to lend itself more to say, "Hey, use a notebook versus a desktop," right, kind of environment. So interesting how that's evolving, and we think it's actually going to favor IT. Because again, offices don't go away, they become sort of a complement to the environment. So I think it's a net add versus any kind of subtraction.

Maybe a little bit of sort of digging into what's happening today. Are you starting to see spending on on-prem equipment taking place as we return to work? Or is it all cloud? Or can you just kind of give us some color around the dynamics right now?

Yes. I'd say the dynamics now, there's no question, there's an increase in infrastructure-type spending for private data centers. Not to the same acceleration that we saw, as an example, in the downturn in 2009, where it kicked into high gear, and certainly not the kind of acceleration we're seeing for devices. And we think some of that is very much predicated on people aren't in offices. And typically, in that environment, people will test equipment. They'll get demoed devices from EMC, from Cisco and so forth. A lot of that, of course, is in a different sort of scenario until people go back to offices, which we think starts to happen late summer and early fall. And we think that will help accelerate that. So when you ask a question, what are they doing? In many cases, they're sweating the asset longer. We don't see them just completely migrating to the public cloud. They want to make sure that they're understanding that because again, some workloads make more sense to run in a private cloud than they do in a public cloud because again, the cloud is not free and things can get pretty expensive. We are seeing that CFOs are getting much more involved in the conversation now that the public cloud has taken full form and realizing that these bills are coming in and they're not going to stop and they're increasing. And I'm asking the questions to Glynis at times saying, "Glynis, we didn't have that expense 3 years ago." This expense is not going to happen every month. What happened in the past? So I think there's more scrutiny realizing that, hey, we've got to get our arms around this and understand really what the costs are overall. So I do think that it is going to be all a hybrid environment for most companies. Small companies, no question, will go public cloud. Doesn't make sense for them to invest. They don't have the technical expertise to have any kind of private infrastructure. But I think for that sort of what we call corporate client to large enterprise, there will be for the foreseeable future. Certainly, I'd say we'll still be selling a lot of hardware for the next 20 years into that space.

And your guidance for the year, which I think was, what, for 4% to 8% revenue growth and pro forma EPS is around $6.70, give or take. It seems to suggest that you've got some growth in the second half from hardware sales. What kind of hardware sales? Because it sounds like it's difficult for me to imagine the PC and net -- notebook market gets even better from here. So presumably, it's service and storage and networking equipment and...

Yes, I think it's all the above. Now the compares, of course, get pretty easy, certainly in the month of May. May, June, July, August, September were pretty low. So we're actually -- we're doing a lot of analysis internally, comparing ourselves to 2019 levels, not 2020, because those levels really plummeted. So we want to hold ourselves a little bit more accountable to make sure that we really are seeing the right growth. But I'd say it's in, of course, the software categories. The cloud category's growing very, very nicely as well. So software and cloud really held up well during 2020. Hardware was the most impacted, as you know. And it was mostly impacted actually in the private sort of infrastructure side because devices became sort of the mainstream that everybody needed to exist with COVID. So it was primarily around the private infrastructure. Devices still have some room to go, believe it or not. You see the constraints out there. There's ASPs that are increasing because components are increasing. So I think, in general, Paul, for the second half of the year, I would think that you'd probably see an average device ASP increases by around 4%. So that's obviously a layup for that. You know what I mean? You don't have to do anything different, just the price points going up because devices are getting more expensive because components are getting more expensive. So we're sort of factoring in that, that could be a 3% to 4% just increase there as well. Never mind any volume increase that we [ are going to ] see. So I think devices will continue to do well in the second half. Now it's -- the concern then is, of course, next year, what occurs because we've sold so many devices. Does -- what does 2022 look like? I would still say that we've always underestimated the performance of devices. They always seem to do much better because they become the essential item now. So I'd still say I think there's still some growth ahead of it even into 2022 at this stage. But I think the big opportunity is, like you said on the hardware front, is the private infrastructure side of the business, which we do see, and certainly in the second half, accelerating far more than it did in the first half of the year.

You touched on a couple of challenges or one of the challenges, which are component shortages. We're also seeing supply chain disruption. We're seeing elevated freight and transportation costs. And yesterday, we saw yet another little flare up of COVID in Malaysia, which could impact some of the supply chains. Now just how you -- how worried you are about this? Is it in guidance? And what are you doing to mitigate risk?

Yes. So I think the current thinking, of course, is that this plagues us through the rest of the year. And of course, it's affecting more than just the IT industry. The automotive industry's really impacted as well on getting devices. So there's a lead time, right? There's builds that are occurring right now, as you know, to build these fabs. That takes a long time to build and to get online. So there's a gestation period. So a lot of that doesn't start to really come into play to help demand until probably February, March best case, where that starts to -- some of that comes online, probably mostly really sort of towards the latter part of the first half of next year. So a lot of that becomes then very demand-dependent on what's really occurring there. But I'd say at this point, it's -- their backlog has been increasing for the last 3 quarters for us from a hardware point of view. I would still say that we will sell more units, though, year-over-year. So it's not like we're in dire straits here, meaning that we're going to sell less units. It's just higher demand. So I think if you talk to all the OEMs, they're going to sell more units, if you talk to HP or Lenovo and Dell. So they're selling more units. So they're getting -- they're not getting everything they'd like, but they're -- it's not like they're contracting from that perspective. So I think it's -- clients are being very mindful. We're being very, very communicative with them in exactly making sure they extend the lead times, realizing that if you give us a 90-day notice in the past, you need to give us now your order rates for the next 6 months. And so clients are doing that. So we can see that in our booking rates where they're going up pretty nicely in that regard. So I'd say that it's not a panic situation by any means. But clients aren't getting everything that they'd like across the board. But I think the OEMs are being very responsible in how they're ensuring they take care of their important clients. And so I'd say we're managing it pretty well at this stage. But it's going to be tight for the next certainly 2 to 3 quarters.

The IT spend is shifting increasingly towards the cloud. Also, the large OEMs are sort of responding with a sort of proxy version of the same through the pay-as-you-go services. I'm thinking particularly at Dell and H -- Hewlett Packard Enterprise. Doesn't -- what does this do to your business model? But isn't it also at a risk of disintermediating you because they're starting to establish somewhat of a direct relationship with the end customer, however big or small?

Yes. Paul, it seems like every few years, we address that in the channel that you're going to be disintermediated. And as you know, 7, 8 years ago, that was the [ tick-tock ] with Azure and AWS, we're going to disintermediate. And now, as you know, over 20% of our gross profit dollars comes from the public cloud. So it's a huge part of our revenue stream. And I think what it really comes down to is the fact that Pure Storage, NetApp, Dell EMC, Cisco, all going to these -- HPE, all going to these as-a-Service-type models. But the reality is they still -- they need people like ourselves because they don't have -- this doesn't sell itself. This is -- again, it's a very technical sale. Their sales teams can only address a small subset of the clients. So when you talk about the tens of thousands of clients that we can address, they need the partner channel community to address those. And they need to provide, very importantly, the managed service that's sort of required and wrapped into that to support these clients. So we actually see it as very complementary to what we're doing as we continue to support them. So they're leaning on us. When we think about the HPEs and the Dells, they're very much looking at, hey, yes, we need the channel to support us to continue to grow this. It's just a different way for them to sell their product. Where we might have sold it as a lot of hardware, and now we're going to sell it more as a Service offering. So now we're very heavily engaged in all those conversations with our clients.

Got you. Let me bring Glynis into the...

Yes. Bring her by.

Glynis, so talk to us a little bit about the balance sheet, cash flow and use of that cash flow moving from capital allocation strategy.

Sure. We ended the Q1 with a leverage ratio of 1.1x. So very comfortable. And on a go-forward basis, we have paid down the debt associated with PCM acquisition on our ABL in the third quarter of last year. We have little cash flow needs throughout the -- in Q4 and then throughout this year. But in general, we're in a good position in terms of what we're going to be borrowing under our ABL. So we would have most, if not all, of our ABL available for M&A and/or share repurchases as we move forward. When we talked about our capital allocations, we had said the first was investing in our core business, paying down debt, M&A and returning capital to the shareholders. I would say now it's investing in the core business, M&A and also share repurchases. And we believe that we have the ability to do both at this stage. So we -- recently, at our Board meeting, we got approval from our Board to increase our share repurchase authorization to $125 million. It's an increase of $100 million. We had $25 million outstanding under our prior authorization. We now have $125 million available that we could use to repurchase shares, depending on market conditions, et cetera. So I think we're in a pretty good cash flow position. One of our mandates last year was to actually get the PCM receivables kind of performing like Insight. Their receivables were significantly more past due, I guess, than the Insight population. So our team worked on that, and I think that we're pretty close. We have a little bit more to do, but that has really helped in terms of our ability to pay down debt as well.

So I mean, how do you feel -- I mean, how do you and the Board feel now that the PCM acquisition is starting to deliver? Are you ready for more?

Yes. I would say definitely. And we're constantly looking. Paul, as you know, we talked to PCM for 2 years before that really got finally consummated. So it takes time. So we're in continual dialogue where it makes sense. Things are a little expensive right now, as you probably know. That's not deterring us, but we're still continuing the conversations, but we're not sort of in a panic here to close on a deal by any means. But no, we think that M&A is a critical part of our strategy. I think we've developed, I think as you would agree, a good competency on integrating, and that's where [ most of ] these problems occur. As I remember, that's where a lot of these things go awry. So I think we've really been able to show that we could deliver, and we can really integrate the cultures well, and of course, the processes and systems. And you need to do it fast because if you don't do it fast, you just create havoc within, internally. You don't get the cost takeout and so forth. And so PCM was a good test for us because it was very, very complex. They had 12 different ERP systems that we had to integrate. They had a multitude of different locations. So it really was a good test for us to show that we could be very resilient and move clients that were -- had a lot of e-commerce connections. We could move them very seamlessly onto our platform. And the good thing is SAP, which is where our current core system is, is a very good platform to integrate businesses into. There's a lot of complexity to it, but it's a very good system to integrate into.

You've executed well. The stocks, I think, close to an all-time high, if not at an all-time high. And -- but you're about to leave, Ken.

Yes.

This is going to be [indiscernible]. So why are you leaving? You're retiring, right?

Yes. I am retiring. I did announce that a couple of weeks ago. So thanks, Paul, for the comments on that. Yes. So I've been doing this for 12 years now. So it's been a great run. I couldn't be more happy with where the company is positioned. I'm 66 years old. So there comes a time when, as my old boss says, isn't your expiration day coming up, kind of a thing. And so it's just something that the Board and I have been talking about for quite some time and what will be the proper time to do this. So we determined that we wanted to make sure that PCM was fully integrated, it was really on the right footing and then to look to say how do we continue on the journey. So I've certainly committed to stay on board until a successor is named. Whether that's the end of this year or even into next year, I'll certainly make sure there's a good continuity plan. So there's no rush to jump out by any means, and there's still so much that we have to get done. So I'm still very fully engaged and not backing off the business at all.

Ken, thanks so much for doing this session with us. We really appreciate it. I guess it's the last one we'll do with you. So farewell, and thanks so much. Bye.

Yes. Thanks so much, Paul. I appreciate it.

Okay. Bye-bye.

Bye-bye.