Datalink Corp. (DTLK, Financial) filed Quarterly Report for the period ended 2012-06-30.
Datalink Corporation has a market cap of $139.6 million; its shares were traded at around $7.87 with a P/E ratio of 10.5 and P/S ratio of 0.4. Datalink Corporation had an annual average earning growth of 7.5% over the past 5 years.
Our product gross profit as a percentage of product sales is impacted by the mix and type of projects we complete for our customers. Our product gross profit as a percentage of product sales for the three and six months ended June 30, 2012 were lower than prior periods. We have experienced a decrease in our product gross profit percentage as we saw an increase in our networking and server business, which historically has carried lower gross margins. The product gross margin percentages we achieved in the first quarters of 2012 and 2011 fall within the range of product gross margin percentages we expect as our strategy continues to mature. Our product gross profit is also impacted by various vendor incentive programs that provide economic incentives for achieving various sales performance targets and early payment of invoices. Vendor incentives were $1.8 million and $1.4 million, respectively, for the three month periods ended June 30, 2012 and 2011. Vendor incentives were $3.7 million and $2.7 million, respectively, for the six month periods ended June 30, 2012 and 2011. As a percentage of product cost of goods sold, vendor incentives were 2.9% and 3.4%, respectively, for the three months ended June 30, 2012 and 2011 and 3.0% and 3.2%, respectively, for the six months ended June 30, 2012 and 2011, respectively. Several of our vendors have tightened eligibility for their programs in the current economic climate and may further change or terminate their programs at any time. Accordingly, we cannot assure that we will achieve and receive similar vendor incentives in the future. We expect that as we continue implementing our strategy to sell comprehensive data center solutions with servers and networking products that our product gross margins for the remainder of 2012 will be between 21% and 23%.
Sales and Marketing. Sales and marketing expenses include wages and commission paid to sales and marketing personnel, travel costs and advertising, promotion and hiring expenses. Sales and marketing expenses totaled $12.2 million, or 10.2% of net sales for the quarter ended June 30, 2012, compared to $9.4 million, or 10.5% of net sales for the second quarter in 2011. Sales and marketing expenses totaled $24.8 million, or 10.4% of net sales for the six months ended June 30, 2012, compared to $18.6 million, or 10.6% of net sales for the same period in 2011.
General and Administrative. General and administrative expenses include wages for administrative personnel, professional fees, depreciation, communication expenses and rent and related facility expenses. General and administrative expenses were $4.6 million, or 3.9% of net sales for the quarter ended June 30, 2012, compared to $3.7 million, or 4.1% of net sales for the second quarter in 2011. General and administrative expenses were $9.3 million, or 3.9% of net sales for the six months ended June 30, 2012, compared to $7.5 million, or 4.3% of net sales for the same period in 2011. Our general and administrative expenses have decreased as a percentage of net sales for both the three and six month periods ended June 30, 2012 as compared to the same periods in 2011.
Engineering. Engineering expenses include employee wages, bonuses and travel, hiring and training expenses for our field and customer support engineers and technicians. Engineering expenses were $5.2 million, or 4.3% of net sales for the quarter ended June 30, 2012, compared to $3.8 million, or 4.3% of net sales for the second quarter in 2011. Engineering expenses were $10.9 million, or 4.6% of net sales for the six months ended June 30, 2012, compared to $8.2 million, or 4.7% of net sales for the same period in 2011.
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Datalink Corporation has a market cap of $139.6 million; its shares were traded at around $7.87 with a P/E ratio of 10.5 and P/S ratio of 0.4. Datalink Corporation had an annual average earning growth of 7.5% over the past 5 years.
Highlight of Business Operations:
Gross Profit. Our total gross profit as a percentage of net sales decreased to 23.4% for the quarter ended June 30, 2012, as compared to 24.2% for the comparable quarter in 2011. Our total gross profit as a percentage of net sales decreased to 23.2% for the six months ended June 30, 2012, as compared to 24.2% for the comparable period in 2011. Product gross profit as a percentage of product sales decreased to 22.6% in the second quarter of 2012 from 24.0% for the comparable quarter in 2011. Product gross profit as a percentage of product sales decreased to 22.3% for the six months ended June 30, 2012 from 24.0% for the same period in 2011. Service gross profit as a percentage of service sales increased to 24.7% for the second quarter of 2012 from 24.6% for the comparable quarter in 2011. Service gross profit as a percentage of service sales increased to 24.8% for the six months ended June 30, 2012 from 24.6% for the same period in 2011.Our product gross profit as a percentage of product sales is impacted by the mix and type of projects we complete for our customers. Our product gross profit as a percentage of product sales for the three and six months ended June 30, 2012 were lower than prior periods. We have experienced a decrease in our product gross profit percentage as we saw an increase in our networking and server business, which historically has carried lower gross margins. The product gross margin percentages we achieved in the first quarters of 2012 and 2011 fall within the range of product gross margin percentages we expect as our strategy continues to mature. Our product gross profit is also impacted by various vendor incentive programs that provide economic incentives for achieving various sales performance targets and early payment of invoices. Vendor incentives were $1.8 million and $1.4 million, respectively, for the three month periods ended June 30, 2012 and 2011. Vendor incentives were $3.7 million and $2.7 million, respectively, for the six month periods ended June 30, 2012 and 2011. As a percentage of product cost of goods sold, vendor incentives were 2.9% and 3.4%, respectively, for the three months ended June 30, 2012 and 2011 and 3.0% and 3.2%, respectively, for the six months ended June 30, 2012 and 2011, respectively. Several of our vendors have tightened eligibility for their programs in the current economic climate and may further change or terminate their programs at any time. Accordingly, we cannot assure that we will achieve and receive similar vendor incentives in the future. We expect that as we continue implementing our strategy to sell comprehensive data center solutions with servers and networking products that our product gross margins for the remainder of 2012 will be between 21% and 23%.
Sales and Marketing. Sales and marketing expenses include wages and commission paid to sales and marketing personnel, travel costs and advertising, promotion and hiring expenses. Sales and marketing expenses totaled $12.2 million, or 10.2% of net sales for the quarter ended June 30, 2012, compared to $9.4 million, or 10.5% of net sales for the second quarter in 2011. Sales and marketing expenses totaled $24.8 million, or 10.4% of net sales for the six months ended June 30, 2012, compared to $18.6 million, or 10.6% of net sales for the same period in 2011.
General and Administrative. General and administrative expenses include wages for administrative personnel, professional fees, depreciation, communication expenses and rent and related facility expenses. General and administrative expenses were $4.6 million, or 3.9% of net sales for the quarter ended June 30, 2012, compared to $3.7 million, or 4.1% of net sales for the second quarter in 2011. General and administrative expenses were $9.3 million, or 3.9% of net sales for the six months ended June 30, 2012, compared to $7.5 million, or 4.3% of net sales for the same period in 2011. Our general and administrative expenses have decreased as a percentage of net sales for both the three and six month periods ended June 30, 2012 as compared to the same periods in 2011.
Engineering. Engineering expenses include employee wages, bonuses and travel, hiring and training expenses for our field and customer support engineers and technicians. Engineering expenses were $5.2 million, or 4.3% of net sales for the quarter ended June 30, 2012, compared to $3.8 million, or 4.3% of net sales for the second quarter in 2011. Engineering expenses were $10.9 million, or 4.6% of net sales for the six months ended June 30, 2012, compared to $8.2 million, or 4.7% of net sales for the same period in 2011.
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