PC Connection (NasdaqGS:CNXN) Conference Transcript

Summary of PC Connection Conference Call - December 11, 2025 Company Overview - Company Name: PC Connection (NasdaqGS: CNXN) - Founded: 43 years ago, went public in 1998 - Employees: Approximately 2,500 - Shares Outstanding: About 25 million - Mission: To be a leading global solution provider connecting customers with technology that enhances growth, elevates productivity, and empowers innovation [4][5] Core Business Segments - Enterprise Group: Focused on clients with 3,000 seats and above - Business Solutions Team: Targets clients with 3,000 seats and below - Public Sector Team: Serves state, local, K-12, and higher education [6][7] Go-to-Market Strategy - Specialization: Each subsidiary specializes in its area to enhance customer service and expertise [5][6] - MarkITplace: An IT procurement tool that allows customers to manage their IT assets and inventory effectively [6] - Vertical Markets: Focus on healthcare, manufacturing, retail, and financial sectors [7] Financial Performance - Revenue Growth: Reported $3.6 billion in revenue for 2024, a record for the company, with a gross profit of $520 million (18.5% gross margin) [18][19] - Net Promoter Score: Achieved a score of 82, significantly higher than the industry average [10] - Earnings Per Share: Increased from $3.15 to $3.29 year-over-year [19] - Cash Flow: Consistent cash generation with inventory turnover of 18 times a year and DSO of 74 days [20] Shareholder Returns - Dividends: Increased from $0.08 to $0.15 per share over the past years, with a commitment to return cash to shareholders [21][22] - Share Buybacks: Approximately $65 million worth of stock repurchased in the first three quarters of the year [22] Growth Drivers - AI and Modern Infrastructure: Focus on secure and hybrid data centers, digital workspace solutions, and supply chain management [13][14] - AI Center (Helix): A dedicated group for applied AI and robotics, with 120 specialists and partnerships with major tech companies [12][13] Market Trends and Future Outlook - Demand for AI: Anticipated growth in demand for edge computing, network bandwidth, and hybrid cloud solutions driven by AI [34] - Gross Margin Improvement: Achieved a record gross margin of 19.6% in Q3, driven by a better mix of business and improved operational efficiency [30][33] Corporate Responsibility - Sustainability Initiatives: Published inaugural sustainability report and focused on charitable contributions [24] Conclusion - Investment Rationale: Strong customer loyalty, recurring revenue streams, financial stability, and global capabilities position the company well for future growth [24][25]