PC Mall's Fourth Quarter 2006 Adjusted Non-GAAP EPS More Than Doubles to $0.23 on 13 Percent Revenue Growth from Q4 2005

Business Wire, Feb 20, 2007

TORRANCE, Calif. -- PC Mall, Inc. (NASDAQ:MALL):

Highlights:

* Adjusted non-GAAP Q4 2006 earnings per share of $0.23, excluding the impact of $0.08 per share related to a lawsuit settlement charge and $0.02 per share related to stock-based compensation expense resulting from the adoption of FAS 123R, compared to earnings per share of $0.11 in Q4 2005.

* Fourth quarter 2006 adjusted non-GAAP net income of $3.0 million, which excludes a $1.0 million after-tax lawsuit settlement charge and a $0.2 million after-tax stock-based compensation expense resulting from the adoption of FAS 123R, compared with net income of $1.4 million for Q4 2005.

* Fourth quarter 2006 net income of $1.7 million, which includes the $1.0 million after-tax lawsuit settlement charge and $0.2 million after-tax stock-based compensation expense resulting from the adoption of FAS 123R, compared with net income of $1.4 million for Q4 2005.

* Earnings per share for Q4 2006 of $0.13, including the impact of $0.08 per share related to the settlement of a lawsuit and $0.02 per share related to stock-based compensation expense resulting from the adoption of FAS 123R, compared to earnings per share of $0.11 in Q4 2005.

* Adjusted non-GAAP Core business operating profit margin in Q4 2006 of 2.1 percent compared to 1.8 percent in Q4 2005.

* Consolidated net sales of $295.3 million for Q4 2006, an increase of 13 percent, compared to non-GAAP consolidated net sales of $260.2 million for Q4 2005.

* Commercial net sales increase of 20 percent for Q4 2006, which includes SMB net sales increase of 25 percent, compared to Q4 2005.

PC Mall, Inc. (NASDAQ:MALL) today reported Q4 2006 adjusted non-GAAP earnings per share of $0.23, which excludes the impact of $0.08 per share related to a lawsuit settlement charge and $0.02 per share related to stock-based compensation expense resulting from our adoption of Financial Accounting Standards Board Statement No. 123 (revised 2004), "Share-Based Payment" ("FAS 123R"). This compares with Q4 2005 earnings per share of $0.11. Earnings per share for Q4 2006, including the aforementioned lawsuit settlement charge and stock-based compensation expense, was $0.13. During Q4 2006, we incurred a $1.7 million pre-tax charge for the settlement of a lawsuit and a $0.4 million expense related to non-cash stock-based compensation, both of which are included in "Selling, general and administrative expenses" ("SG&A") on our Consolidated Statements of Operations.

Consolidated net sales of $295.3 million for Q4 2006 increased by $33.7 million, or 13 percent, compared to consolidated net sales of $261.6 million in Q4 2005. Excluding net sales in Q4 2005 of $1.4 million to our former subsidiary, eCOST.com, generally at our cost, consolidated net sales for Q4 2006 increased by $35.1 million to $295.3 million compared to non-GAAP consolidated net sales of $260.2 million in Q4 2005.

Adjusted non-GAAP consolidated net income for Q4 2006, which excludes the aforementioned $1.0 million after-tax lawsuit settlement charge and $0.2 million after-tax stock compensation expense, was $3.0 million, an increase of $1.6 million compared with net income of $1.4 million in Q4 2005. Consolidated net income for Q4 2006 was $1.7 million. The increase in net income reflects the result of a number of initiatives we have implemented to increase our gross profit and reduce our SG&A expenses.

Frank Khulusi, Chairman, President and CEO of PC Mall, Inc., said, "We are very pleased with our Q4 2006 results especially our Core business adjusted non-GAAP operating profit margin of 2.1 percent. We were able to accomplish these results in part by increasing our account executive productivity and reducing our SG&A expenses through a reduction of labor cost from our Philippine initiative and increased advertising efficiency. While we expect that there will be quarterly fluctuations in our adjusted non-GAAP Core business quarterly operating profit margin in part as a result of probable fluctuations in sales and the various components of gross margin, we are very pleased with our overall trend line."

Core business (which excludes OnSale.com) net sales for Q4 2006 were $293.5 million compared with non-GAAP Core business net sales of $253.6 million in Q4 2005, excluding the net sales to eCOST.com, an increase of 16 percent. Commercial net sales grew 20 percent in Q4 2006 compared to Q4 2005, primarily the result of a 25 percent increase in SMB sales, which includes sales of $28.8 million in products to a single customer in Q4 2006. Public sector sales increased by 82 percent in Q4 2006 compared to Q4 2005 due to the products business acquired from GMRI in September 2006. These increases in Core business net sales were partially offset by an 11 percent decline in Q4 2006 consumer net sales from the same quarter last year.

Consolidated gross profit in Q4 2006 increased to $33.9 million compared to $33.7 million in Q4 2005 and consolidated gross profit margin for Q4 2006 decreased to 11.5 percent from 12.9 percent in Q4 2005. Gross profit margin for Q4 2006 was negatively impacted by low margin sales to a single customer in Q4 2006 mentioned above.