PC nection(US:CNXN)2023-10-31 16:00Financial Performance - Net sales for Q3 2023 were $693,086, a decrease of 10.6% compared to $775,692 in Q3 2022[16] - Gross profit for Q3 2023 was $131,888, down from $136,626 in Q3 2022, reflecting a gross margin of 19.0%[16] - Net income for Q3 2023 increased to $25,598, compared to $23,206 in Q3 2022, representing a growth of 10.3%[18] - Basic earnings per share for Q3 2023 were $0.97, up from $0.88 in Q3 2022, indicating a year-over-year increase of 10.2%[16] - Total income before taxes for Q3 2023 was $34,710, compared to $32,047 in Q3 2022, marking an increase of 8.3%[16] - Comprehensive income for Q3 2023 was $25,752, compared to $23,206 in Q3 2022, reflecting an increase of 11.1%[18] - Net income for the nine months ended September 30, 2023, was $59,493,000, a decrease of 15.4% compared to $70,396,000 for the same period in 2022[22] - For the nine months ended September 30, 2023, total net sales were $2,154.2 million, a decrease of $238.3 million or 10.0% compared to $2,392.5 million in the prior year[120] Expenses and Charges - The company reported restructuring and other charges of $44 in Q3 2023, while there were no such charges in Q3 2022[16] - The company recorded restructuring and other charges of $2,687,000 for the nine months ended September 30, 2023, primarily related to workforce reductions[32] - SG&A expenses for Q3 2023 decreased by $5.1 million, or 4.8%, to $99.8 million, with SG&A as a percentage of net sales increasing to 14.4% from 13.5%[87] - Selling, general and administrative (SG&A) expenses for the nine months ended September 30, 2023, decreased in dollars but increased as a percentage of net sales, with total SG&A expenses at $304.1 million, reflecting a 0.4% decrease year-over-year[129] Cash Flow and Investments - Net cash provided by operating activities increased significantly to $185,665,000 for the nine months ended September 30, 2023, compared to $15,689,000 for the same period in 2022[22] - Cash and cash equivalents at the end of the period were $240,509,000, up from $116,190,000 at the end of September 30, 2022[22] - Cash provided by operating activities was $185.7 million for the nine months ended September 30, 2023, significantly higher than $15.7 million for the same period in 2022[152] - Cash used in investing activities for the nine months ended September 30, 2023 was $48.7 million for U.S. Government treasury securities and $7.4 million for property and equipment, compared to $7.0 million in the prior year period[158] Segment Performance - Business Solutions segment generated $732,231 in sales for the nine months ended September 30, 2023, compared to $893,083 in the same period of 2022, reflecting a decrease of about 18%[48] - The Company’s Accessories segment sales for the nine months ended September 30, 2023, were $245,317, compared to $299,113 in the same period of 2022, reflecting a decline of approximately 18%[48] - The Software segment reported sales of $225,483 for the nine months ended September 30, 2023, compared to $218,981 in the same period of 2022, indicating a growth of about 3%[48] - Enterprise Solutions segment net sales were $276.6 million, a decrease of $28.9 million or 9.5%, primarily due to declines in accessories, software, and desktops[102] - Public Sector Solutions segment net sales increased by $35.2 million or 8.1%, driven by a $42.3 million increase in federal government sales[124] Challenges and Future Outlook - The company faced challenges including increased shipping costs and potential service interruptions from third-party shippers, which could impact margins[12] - Future investments in IT products may be affected by macroeconomic factors such as rising inflation and changing interest rates[12] - The company is evaluating additional restructuring activities for the fourth quarter of 2023 and beyond[32] - The company expects to continue its strategic initiatives, including potential new product offerings and market expansions, although specific details were not provided[72] Balance Sheet and Financial Ratios - Total assets as of September 30, 2023, were $1,181,427, an increase from $1,134,125 as of September 30, 2022[64] - The Company had no outstanding borrowings under its $50,000 credit facility as of September 30, 2023, indicating full availability for future borrowings[70] - The funded debt ratio must not exceed 2.0 to 1.0, and as of September 30, 2023, there were no outstanding borrowings, thus not limiting potential borrowings[167] - Minimum consolidated net worth requirement was calculated at $591.2 million as of September 30, 2023, while actual consolidated stockholders' equity was $819.2 million[168]