PCM, Inc. (NASDAQ:PCMI) Q1 2019 Earnings Conference Call Transcript
Apr 25, 2019 • 09:00 am ET
Good morning. My name is Rusty, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter 2019 PCM Incorporated Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions)
I would like to turn the call over to Ms. Kim Rogers, Hayden IR. Ms. Rogers, you may begin.
Thank you, Rusty. Good morning, everyone. We appreciate you joining us today to discuss PCM's first quarter 2019 financial results. Joining me on the call today are Frank Khulusi, PCM's Chairman and Chief Executive Officer; Jay Miley, President; and Brandon LaVerne, Chief Financial Officer. Following their prepared comments, we will open the call to your questions.
At this time, I'd like to refer to the safe harbor statement under the Private Securities Litigation Reform Act of 1995. During this conference call, management may discuss financial projections, information or expectations about the Company's products or markets or otherwise make statements about the future which statements are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from statements made. These risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission.
Now I'd like to turn the call over to Frank Khulusi. Please go ahead, Frank.
Frank F. Khulusi
Thank you, Kim, and good morning, everyone. Thank you for joining us today. 2019 is off to a strong start. We grew our adjusted EPS by 35% to $0.46 a share. Our commercial segment sales grew by 3% even though we exited certain non-strategic lower margin sales as anticipated and despite the quarter having one less shipping day. I'm also pleased with the gross margin improvement of 20 basis points to a first quarter record 15.6%, driven by the increase in sales from our higher margin Commercial segment, as well as an increase in higher margin solution sales.
Our team also maintained a strong focus on tight expense management, which drove a 3% reduction in SG&A. Further, after coming off a great year of cash flow in 2018, we drove an additional $18 million in cash flow from operations. Our first quarter results affirm the effectiveness of our strategy to leverage our investments and further optimize our sales mix, while maintaining our costs in order to drive shareholder value.
At this time, I'd like to turn the call over to our President, Jay Miley for some more specific details on the quarter. Jay?
Robert J. Miley
Thanks, Frank. As indicated in Frank's remarks and as demonstrated in the financial results just released, we remain extremely focused on optimizing our cost structure. In Q1, on a relatively stable sales level our operating expenses or SG&A declined by $2.7 million, or 3% and was down 26 basis points year-on-year to 14% of net sales. In addition to our cost structure optimization efforts, we continue to expand our gross margins. In the quarter just