PCM up to 169 UK staff following 'insolvency of a UK competitor'
CEO outlines progress in UK business, with sales at $2.7m in Q3
PCM has bolstered its UK headcount to 169 after "the insolvency of a UK competitor" led to its hiring a host of salespeople.
Speaking on an earnings call for PCM's quarterly results, CEO Frank Khulusi said the reseller had capitalised on the misfortunes of a UK rival - but that the new hires had taken PCM over its $4m budget for setting up in the UK.
Khulusi did not specify the name of the insolvent UK firm, but it would seem fair to assume that he was referring to Misco's recently folded UK business.
On the call, transcribed by Seeking Alpha, Khulusi said: "We are aligning our resources into areas that are important to our clients' business such as the expansion of our UK segment, including the acquisition of the Stack Group at the end of September, and the recent hiring of many sales representatives that became available due to the insolvency of a UK competitor.
"[We] will exceed the original $4m in costs due to these opportunistic additions which create a more robust platform for growth going forward, and enables our UK business to gain a strong foothold in Europe.
"With that said, we expect the UK segment will contribute nicely to our growth in 2018 and intend to manage this segment to be accretive to earnings for fiscal 2018."
Khulusi did not reveal how many employees had joined from the UK competitor, but earlier in the year PCM said it planned to have around 90 UK employees by the end of 2017.
PCM went against the grain when setting up shop in the UK, opting to start from scratch rather than acquire an established firm as a starting point.
Share price plummets
The UK business may be growing quicker than planned, but Wall Street seemed far from impressed with PCM's quarterly results, which saw revenue drop seven per cent to $545.5m. PCM's share price fell over 20 per cent in after-hours trading.
Khulusi said the UK contributed $2.7m to these sales in Q3.
The revenue drop was attributed to Hurricanes Harvey and Irma in the US, as well as the non-inclusion of the sales from En Pointe business that PCM acquired in 2015. PCM is currently locked in a lawsuit with the previous owners of this business, claiming they were untruthful about the firm's financial situation at the time of the acquisition.
In Q3 PCM cut $12m from its annual spend and will continue to cut spending in Q4, but also experienced a 10 per cent jump in administrative costs to $79.9m - the bulk of which is the result of a $6.6m increase in personnel costs.
Some $1.5m from this is attributed to the formation of the UK business.
As a result, PCM also took a hit to its operating profit, which was down 87 per cent year on year to $1.4m.