DTLK Datalink Corp.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

July 30, 2015

(Date of Report — date of earliest event reported)

DATALINK CORPORATION

(Exact name of registrant as specified in charter)

Minnesota

(State or other jurisdiction of incorporation or organization)

10050 Crosstown Circle Suite 500, Eden Prairie, MN 55344

(Address of principal executive offices)

952-944-3462

(Registrant’s telephone number, including area code)

(Former Name and Address)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operation and Financial Condition

On July 30, 2015, the Company issued a press release announcing its second quarter and six months ending June 30, 2015 earnings.  The full text of this press release is furnished on Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits

(d)                                 Exhibits:

99.1                        Press release dated July 30, 2015 announcing the Company’s second quarter and six months ending June 30, 2015 earnings (furnished pursuant to Item 12).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  July 30, 2015

2

EXHIBITS INDEX

Exhibit 99.1                              Press release dated July 30, 2015 announcing the Company’s second quarter and six months ending June 30, 2015 earnings (furnished pursuant to Item 12).

3

Exhibit 99.1

DATALINK REPORTS 2015 SECOND QUARTER AND SIX MONTH OPERATING RESULTS

Second Quarter and Six Month Revenues Up 15% and 20% Year-Over-Year, Respectively

EDEN PRAIRIE, Minn., July 30, 2015 — Datalink (Nasdaq: DTLK), a leading provider of data center infrastructure and services, today reported results for its second quarter and six months that ended June 30, 2015.  Financial results for both reporting periods include the results of operations from the acquisition of Bear Data Solutions, which closed on October 19, 2014.

Revenues for the quarter ended June 30, 2015, increased 15% to $182.6 million compared to $159.4 million for the quarter ended June 30, 2014, and increased 4% over revenues of $175.4 million in the first quarter of 2015.  Revenues for the six months ended June 30, 2015, increased 20% to $358.0 million compared to $298.9 million for the six months ended June 30, 2014.

GAAP Results

On a GAAP basis, the company reported net earnings of $661,000 or $0.03 per diluted share for the second quarter ended June 30, 2015.  This compares to net earnings of $3.6 million or $0.16 per diluted share in the second quarter of 2014. For the six months ended June 30, 2015, the company reported net earnings of $647,000 or $0.03 per diluted share, compared to net earnings of $3.9 million, or $0.17 per diluted share, for the six months ended June 30, 2014.

Non-GAAP Results

Non-GAAP net earnings for the second quarter of 2015 were $2.7 million, or $0.12 per diluted share, compared to non-GAAP net earnings of $4.9 million, or $0.22 per diluted share, in the second quarter of 2014.  For the six months ended June 30, 2015, the company reported non-

GAAP net earnings of $5.0 million, or $0.22 per diluted share, compared to non-GAAP net earnings of $6.1 million, or $0.28 per diluted share, for the six months ended June 30, 2014.  A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.

Highlights of the quarter and six months ended June 30, 2015, include:

·                  A 21% year-over-year increase in total services revenues in both the second quarter and the first six months of 2015, marking significant progress in building the company’s services business to improve margins and help customers drive data center transformation.

·                  A 48% year-over-year increase in professional services revenues to a record $17.8 million in the second quarter of 2015, simultaneously increasing the portion of Datalink revenues coming from professional services to a record 10% during the quarter.

·                  Multiple seven-figure contracts awarded to Datalink’s Advanced Services practice, including engagements for large data center consolidation and transformation, infrastructure virtualization and application and data migration projects.

·                  An 80% quarter-over-quarter increase in the number of converged data center infrastructure sales, a key building block for other IT initiatives like private clouds, where Datalink can offer additional consulting, managed services, as well as support services.

·                  A #43 ranking on CRN’s 2015 Solution Provider 500 list of North America’s top technology integrators based on annual revenues, marking a steady climb from #72 just five years ago.

These gains, however, were accompanied by a decline in the company’s core storage revenues caused by falling storage prices, new storage technologies and an industrywide slowdown in storage spending. That decline also contributed to lower gross margins during the second quarter and first six months of 2015.

The company responded earlier in the week by announcing a workforce rebalancing that will eliminate approximately $10 million of operating expenses on an annualized basis. The full impact of these adjustments will be realized in 2016, with about $2 million of savings to be realized in the fourth quarter of this year.

“We anticipated some of the changes that are occurring in the IT market, and that is why we have been working hard over the last few years to transition the company away from its dependence on storage sales and transform it into a full-service provider of data center solutions and services. We are making strong progress, as our continued growth of consulting and managed services along with converged data center infrastructure indicate, and we will continue to invest in these and other parts of the business in support of continued growth,” said Paul Lidsky, Datalink’s president and CEO. “The actions we took will redistribute our resources to meet changes in the market and help keep the company growing profitably.”

Outlook

Datalink projects revenues of $175.0 million to $185.0 million for the third quarter of 2015, compared to $144.9 million for the third quarter of 2014.  This represents an increase in expected revenues of between 21% and 28%, based on the company’s current backlog, sales pipeline, historical trends, and expected continued softness in storage spending countered by continued growth in the company’s networking and services business during the quarter.  The company expects third quarter 2015 net earnings to be between $0.04 and $0.09 per diluted share on a GAAP basis, and net earnings of between $0.13 and $0.18 per diluted share on a non-GAAP basis.  This compares to net earnings of $0.16 per diluted share and $0.19 per diluted share on a GAAP and non-GAAP basis, respectively, for the same period in 2014.

Non-GAAP earnings per share exclude the effect of acquisition accounting adjustments to deferred revenue and costs, integration and transaction costs related to acquisitions, stock-based compensation expense, amortization of intangible assets, and the related effects on income taxes.

The company estimates this total effect will be approximately $0.09 per diluted share for the third quarter of 2015.

Conference Call and Webcast Today

Datalink will hold a conference call shortly after 4:00 p.m. Central Time during which time Datalink’s president and chief executive officer, Paul Lidsky, and chief financial officer, Greg Barnum, will discuss company results and provide a business overview. Participants can access the conference call by dialing (855) 793-2451. Participants will be asked to identify the Datalink conference call and provide the designated identification number (87596165). A live webcast of the conference call can be accessed here or via Datalink’s investor relations website at www.datalink.com.

About Datalink

A complete data center solutions and services provider for Fortune 500 and mid-tier enterprises, Datalink transforms data centers so they become more efficient, manageable and responsive to changing business needs. Datalink helps leverage and protect storage, server, and network investments with a focus on long-term value, offering a full lifecycle of services, from consulting and design to implementation, management and support. Datalink solutions span virtualization and consolidation, data storage and protection, advanced network infrastructures, business continuity, and cloud enablement. Each delivers measurable performance gains and maximizes the business value of IT. For more information, call 800.448.6314 or visit www.datalink.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. This press release contains forward-looking statements, including (i) the anticipated timing of the acquisition, (ii) the expected impact of the acquisition on Datalink, (iii) Datalink’s plans with respect to the acquired business and (iv) our internal projections of certain anticipated 2015 results, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should” and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, many of which are included under “Risk Factors” in our annual report on Form 10-K for our year ended December 31, 2014, including, but not limited to: the level of continuing demand for data center solutions and services including the effects of current economic and credit conditions and the ability of organizations to outsource data center infrastructure-related services to service providers such as us; the migration of organizations to virtualized server environments, including using a private

cloud computing infrastructure; the extent to which customers deploy disk-based backup recovery solutions; the realization of the expected trends identified for advanced network infrastructures; reliance by manufacturers on their data service partners to integrate their specialized products; continued preferred status with certain principal suppliers; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; fixed employment costs that may impact profitability if we suffer revenue shortfalls; our ability to hire and retain key technical and sales personnel; continued productivity of our sales personnel; our dependence on key suppliers; our ability to adapt to rapid technological change; success of the implementation of our enterprise resource planning system; risks associated with integrating completed and future acquisitions (including a failure of anticipated synergies to materialize); the ability to execute our acquisition strategy; fluctuations in our quarterly operating results; future changes in applicable accounting rules; and volatility in our stock price. Furthermore, our revenues for any particular quarter are not necessarily reflected by our backlog of contracted orders, which also may fluctuate unpredictably. We cannot assure you that we can grow or maintain our revenue and backlog from current levels.  Additional factors that may cause actual results to differ from our assumptions and expectations include those set forth in our most recent filing on Form 10-K filed with the Securities and Exchange Commission.  Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made.  We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Details

Non-GAAP financial measures exclude the impact from acquisition accounting adjustments to deferred revenue and costs, stock-based compensation expense, amortization of acquisition intangible assets, integration and transaction costs related to acquisitions, severance costs and the related effects on income taxes.  These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

These non-GAAP financial measures facilitate management’s internal comparisons to our historical operating results and comparisons to competitors’ operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making, such as employee compensation planning. We believe that the presentation of these non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to investors

and management regarding financial and business trends relating to our financial condition and results of operations.

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Company Contacts:

Investors & Analysts

Greg Barnum

Vice President and CFO

Phone:  952-279-4816

Email:  gbarnum@datalink.com

Press

Jill Schmidt

S&S Public Relations, Inc.

Phone: 847-415-9311
Email: jills@sspr.com

DATALINK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

DATALINK CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

DATALINK CORPORATION

RECONCILIATION  BETWEEN GAAP AND NON-GAAP NET INCOME

(In thousands, except per share data)

(Unaudited)

DATALINK CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)