Core Insights - The company reported mixed fourth-quarter 2025 results, with record gross profit in Business Solutions and Enterprise Solutions segments, but a significant decline in Public Sector Solutions due to project timing and the absence of a prior-year contract [4][6][10] Financial Performance - Operating income increased 4.2% to $23.6 million, and excluding severance expenses, it rose 17.8% to $26.7 million [1] - Diluted earnings per share were $0.82, up 5.1%, while adjusted diluted EPS was $0.91, up 16.7% year over year [1] - Consolidated gross profit rose 4.5% year over year to $135.6 million, with gross margin expanding 100 basis points to 19.3% [2] - Total net sales were $702.9 million, down 0.8% from the prior-year quarter, attributed to public sector headwinds [2] Segment Performance - Business Solutions net sales rose 4.2% to $273.5 million, with gross profit increasing 11.4% to $69.8 million [9] - Enterprise Solutions delivered net sales growth of 11.9% to $338.7 million, driven by demand for advanced technologies [11] - Public Sector Solutions net sales fell 36.8% to $90.8 million, with gross billings declining 23.7% to $170.7 million [10] Cost Management and Capital Returns - The company executed severance actions totaling $5.9–6.2 million across Q4 and Q1, targeting annual savings of approximately $7–8 million [5][13] - Returned $91.4 million to shareholders in 2025, including a 33% increase in the dividend to $0.20 per share [5][16] Outlook and Market Conditions - The company expects a nearly $40 million public sector headwind in the next quarter but anticipates improvement later in 2026 [5][21] - Management projects a blended estimate of about 4% U.S. IT market growth for 2026, expecting to outperform the market by 200 basis points [19] - Strong performance noted in vertical markets, with net sales growth of 22% in retail, 28% in financial services, and 19% in healthcare [18]