PC Connection (CNXN) came out with quarterly earnings of $0.97 per share, missing the Zacks Consensus Estimate of $1.01 per share. This compares to earnings of $0.97 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -3.96%. A quarter ago, it was expected that this information technology services provider would post earnings of $0.83 per share when it actually produced earnings of $1, delivering a surprise of 20.48%.Over the last ...

Financial Data and Key Metrics Changes - Connection achieved record net income with earnings per share of $1.02 for Q3 2024, a 5.4% increase from $0.97 in Q3 2023 [11][15] - Consolidated net sales were $724.7 million, up 4.6% year-over-year, while gross profit increased 2.7% to $135.4 million [15][22] - Operating income decreased by 6.2% to $30 million, with operating income as a percentage of sales at 4.1%, down from 4.6% in the prior year [15][22] Business Segment Performance - Business Solutions segment net sales were $252.6 million, down 6.1% year-over-year, with a 20% decrease in advanced technology product sales [16] - Public Sector Solutions net sales increased by 18.7% to $175.1 million, driven by Federal Government sales [18] - Enterprise Solutions segment net sales rose 7.4% to $297 million, with a 14% increase in endpoint device sales [20] Market Data and Key Metrics Changes - Healthcare revenue increased by 20% year-over-year, while retail revenue grew by 23% due to device refresh initiatives [29] - Manufacturing revenue saw a 1% increase, focusing on productivity gains and cybersecurity [30] - Financial Services revenue increased by 5%, driven by investments in cybersecurity and interoperability [31] Company Strategy and Industry Competition - The company is focused on navigating the evolving technology landscape, emphasizing AI and digital transformation [10][36] - Strategic investments are being made in technical sales and customer engagement to enhance capabilities [55] - The competitive environment is intensifying as customers remain cautious about IT budgets and AI adoption [41] Management's Comments on Operating Environment and Future Outlook - Management noted that demand for advanced technologies has been negatively impacted by customer uncertainty regarding IT roadmaps [13] - A delayed recovery in demand is expected to continue into 2024, with cautious spending anticipated [34][35] - The company remains optimistic about growth in 2025, particularly in device demand and advanced technologies [35] Other Important Information - SG&A expenses increased by 5.6% due to investments in sales and marketing [21] - Cash flow from operations for the first nine months of 2024 was $148.6 million, with a decrease in accounts receivable and inventory [25][26] - The company declared a quarterly dividend of $0.10 per share, payable on November 29, 2024 [24] Q&A Session Summary Question: Competitive environment and gross margin pressure - Management indicated that gross margin pressure was primarily due to large project rollouts, particularly with the Federal Government [40] Question: Impact on operating margin and earnings growth - Management expects overall gross profit growth despite margin rate compression, with ongoing investments aimed at improving technical sales capabilities [44] Question: Trends for Q4 and budget flush expectations - Management noted that Q4 is expected to be similar to Q3, with cautious customer behavior continuing [46][48] Question: Timing for benefits from AI readiness investments - Management anticipates seeing tangible benefits from investments in technical sales by Q2 2025, with ongoing improvements expected [56] Question: Recovery outlook for Business Solutions segment - Management sees potential recovery in the Enterprise business but expects the SMB segment to be slower due to macroeconomic concerns [59]

Financial Performance - Net sales for Q3 2024 reached $724.7 million, an increase of $31.6 million or 4.6% compared to Q3 2023[67] - Gross profit for Q3 2024 increased by $3.5 million or 2.7% year-over-year, totaling $135.4 million, while gross margin decreased to 18.7% from 19.0%[67] - Operating income for Q3 2024 decreased by $2.0 million year-over-year, resulting in an operating margin of 4.1%[68] - Net income for the third quarter of 2024 increased to $27.1 million, compared to $25.6 million in the same quarter of 2023, primarily due to higher interest income and other income[92] - Net sales for the nine months ended September 30, 2024, decreased to $2,093.2 million, a decline of $61.0 million or 2.8% compared to the same period in 2023[93] - Gross profit for the total company increased to $390.0 million, reflecting a year-over-year increase of $8.0 million or 2.1%[93] - Net income for the nine months ended September 30, 2024, increased to $66.4 million, compared to $59.5 million in the same period of 2023[111] Segment Performance - The Enterprise Solutions segment accounted for 41% of net sales in Q3 2024, up from 40% in Q3 2023[69] - Enterprise Solutions segment net sales reached $297.0 million, up $20.4 million or 7.4% year-over-year, driven by increases in displays and sound, desktops, and accessories[75] - Public Sector Solutions segment net sales increased by $27.6 million or 18.7% to $175.1 million, with federal government sales rising by $25.6 million or 97.2%[76] - Business Solutions segment net sales decreased by $16.4 million or 6.1% to $252.6 million, primarily due to declines in net/com products and other hardware/services[77] - Enterprise Solutions segment net sales remained stable at $878.4 million, while Business Solutions and Public Sector Solutions segments saw declines of 2.0% and 9.6%, respectively[93][96][97] Expenses and Margins - SG&A expenses rose by $5.6 million or 5.6% year-over-year to $105.4 million, with SG&A as a percentage of net sales increasing to 14.5%[67] - Selling, general and administrative (SG&A) expenses rose to $105.4 million, an increase of $5.6 million or 5.6% from $99.8 million, representing 14.5% of net sales[83] - SG&A expenses increased to $315.2 million, representing 15.1% of net sales, an increase of 70 basis points compared to the prior year[101] - Income from operations decreased slightly to $74.4 million, with an operating margin of 3.6%, up from 3.5% in the previous year[108] Cash and Investments - As of September 30, 2024, the company had $167.5 million in cash and cash equivalents and $261.6 million in short-term investments[115] - Cash used in investing activities increased significantly to $(109.7) million in 2024 from $(56.1) million in 2023, primarily due to $255.1 million in purchases of U.S. Government treasury securities[121] - Cash used in financing activities was $(16.4) million for the nine months ended September 30, 2024, compared to $(12.0) million in 2023, reflecting increased borrowings and repayments[121] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $148.7 million, a decrease of 19.93% from $185.7 million in the same period of 2023[121] Interest and Tax - Interest income, net rose to $4.8 million, an increase of $2.1 million from $2.7 million in the prior year quarter, attributed to higher cash equivalent balances and interest rates[90] - Interest income increased significantly to $14.1 million, up from $5.8 million, primarily due to higher cash equivalent balances and interest rates[109] - The effective tax rate decreased to 26.0% for the quarter ended September 30, 2024, compared to 26.3% for the same quarter in 2023[91] Operational Efficiency - The cash conversion cycle improved to 40 days as of September 30, 2024, down from 51 days in 2023, indicating better efficiency in managing working capital[126] - Days of sales outstanding (DSO) decreased to 67 days in September 2024 from 71 days in September 2023, contributing to the improved cash conversion cycle[124] - The company continues to monitor its cash conversion cycle to manage working capital and operating cash needs effectively[124] Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.10 per share, to be paid on November 29, 2024[119] Debt and Financial Ratios - The company had no outstanding borrowings under its credit facility as of September 30, 2024, with a borrowing capacity of up to $50.0 million[132] - The funded debt ratio was calculated at 0.0 to 1.0 as of September 30, 2024, well below the maximum limit of 2.0 to 1.0, allowing for potential borrowings[136] - Minimum consolidated net worth was calculated at $636.2 million as of September 30, 2024, exceeding the required minimum of $346.7 million[137] - Cash receipts are automatically applied against any outstanding borrowings, allowing for efficient cash management[133] Strategic Initiatives - The company plans to continue investing in IT solutions, anticipating higher-margin service revenues despite increased service costs[63] - The company faces challenges in managing SG&A expenses while investing in IT systems and personnel to support growth[62] - The product mix shift towards lower-margin endpoint devices contributed to the decrease in gross margin[67] - The company partners with over 2,500 suppliers and offers over 460,000 products, including major brands like Apple and Cisco[60] - Restructuring and other charges decreased to $0.4 million from $2.7 million in the prior year, primarily related to workforce reductions[107]

Exhibit 99.1 Investor Relations Contact: Thomas Baker, 603.683.2505 Senior Vice President, CFO, and Treasurer tom@connection.com CONNECTION (CNXN) REPORTS THIRD QUARTER 2024 RESULTS THIRD QUARTER SUMMARY: ● Net sales: $724.7 million, increase of 4.6% y/y ● Gross profit: $135.4 million, increase of 2.7% y/y ● Gross margin: 18.7%, decrease of 30 basis points y/y ● Net income: $27.1 million, increase of 5.7% y/y ● Diluted EPS: $1.02, compared to $0.97 y/y Merrimack, NH—October 30, 2024—Connection (PC Connectio ...

Core Viewpoint - The market anticipates that PC Connection (CNXN) will report a year-over-year increase in earnings due to higher revenues for the quarter ended September 2024, with results expected on October 30 [1] Earnings Expectations - The consensus estimate for quarterly earnings is $1.01 per share, reflecting a year-over-year increase of 4.1% [2] - Expected revenues are $726.98 million, which is a 4.9% increase from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has been revised 0.49% lower in the last 30 days, indicating a reassessment by analysts [3] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.47%, indicating bearish sentiment among analysts [4][6] - The stock currently holds a Zacks Rank of 4, complicating predictions for an earnings beat [6] Historical Performance - In the last reported quarter, PC Connection had an earnings surprise of +20.48%, reporting earnings of $1 per share against an expectation of $0.83 [7] - Over the past four quarters, the company has beaten consensus EPS estimates three times [7] Conclusion - Despite the potential for an earnings beat, PC Connection does not appear to be a compelling candidate for such an outcome based on current estimates and rankings [8]

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PC Connection, Inc. (NASDAQ:CNXN) Q2 2024 Earnings Conference Call July 31, 2024 4:30 PM ET Company Participants Samantha Smith - Investor Relations Tim McGrath - President & Chief Executive Officer Tom Baker - Senior Vice President & Chief Financial Officer Conference Call Participants Adam Tindle - Raymond James Anthony Lebiedzinski - Sidoti & Company Operator Good afternoon and welcome to the Second Quarter 2024 Connection Earnings Conference Call. My name is Justin and I will be the coordinator for toda ...

PC Connection (CNXN) came out with quarterly earnings of $1 per share, beating the Zacks Consensus Estimate of $0.83 per share. This compares to earnings of $0.80 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 20.48%. A quarter ago, it was expected that this information technology services provider would post earnings of $0.64 per share when it actually produced earnings of $0.50, delivering a surprise of -21.88%. Over the l ...