Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 27, 2023 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Entity File Number | 0-23827 | |
Entity Registrant Name | PC CONNECTION, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 02-0513618 | |
Entity Address, Address Line One | 730 Milford Road | |
Entity Address, City or Town | Merrimack | |
Entity Address, State or Province | NH | |
Entity Address, Postal Zip Code | 03054 | |
City Area Code | 603 | |
Local Phone Number | 683-2000 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | CNXN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,277,597 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001050377 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 134,810 | $ 122,930 |
Accounts receivable, net | 621,844 | 610,280 |
Inventories, net | 199,317 | 208,682 |
Prepaid expenses and other current assets | 18,145 | 11,900 |
Total current assets | 974,116 | 953,792 |
Property and equipment, net | 58,372 | 59,171 |
Right-of-use assets | 6,611 | 7,558 |
Goodwill | 73,602 | 73,602 |
Intangible, net | 4,343 | 4,648 |
Other assets | 1,013 | 1,055 |
Total Assets | 1,118,057 | 1,099,826 |
Current Liabilities: | ||
Accounts payable | 239,058 | 232,638 |
Accrued payroll | 24,304 | 24,071 |
Accrued expenses and other liabilities | 54,947 | 53,808 |
Total current liabilities | 318,309 | 310,517 |
Deferred income taxes | 17,970 | 17,970 |
Noncurrent operating lease liabilities | 4,623 | 4,994 |
Other liabilities | 672 | 170 |
Total Liabilities | 341,574 | 333,651 |
Stockholders' Equity: | ||
Common stock | 291 | 291 |
Additional paid-in capital | 127,424 | 125,784 |
Retained earnings | 698,128 | 686,037 |
Treasury stock, at cost | (49,360) | (45,937) |
Total Stockholders' Equity | 776,483 | 766,175 |
Total Liabilities and Stockholders' Equity | $ 1,118,057 | $ 1,099,826 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Consolidated Statements of Income | ||
Net sales | $ 727,545 | $ 788,344 |
Cost of sales | 605,249 | 660,038 |
Gross profit | 122,296 | 128,306 |
Selling, general and administrative expenses | 103,282 | 98,172 |
Restructuring and other charges | 897 | |
Income from operations | 18,117 | 30,134 |
Other income (expense), net | 1,286 | (3) |
Income before taxes | 19,403 | 30,131 |
Income tax provision | (5,205) | (8,339) |
Net income | $ 14,198 | $ 21,792 |
Earnings per common share: | ||
Basic | $ 0.54 | $ 0.83 |
Diluted | $ 0.54 | $ 0.83 |
Shares used in computation of earnings per common share: | ||
Basic | 26,325 | 26,255 |
Diluted | 26,436 | 26,405 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Shares | Total |
Balance at Dec. 31, 2021 | $ 290 | $ 122,354 | $ 605,766 | $ (45,937) | $ 682,473 |
Balance (in shares) at Dec. 31, 2021 | 29,025 | (2,773) | |||
Stock-based compensation expense | 1,382 | 1,382 | |||
Restricted stock units vested (in shares) | 9 | ||||
Shares withheld for taxes paid on stock awards | (165) | (165) | |||
Net income | 21,792 | 21,792 | |||
Balance at Mar. 31, 2022 | $ 290 | 123,571 | 627,558 | $ (45,937) | 705,482 |
Balance (in shares) at Mar. 31, 2022 | 29,034 | (2,773) | |||
Balance at Dec. 31, 2022 | $ 291 | 125,784 | 686,037 | $ (45,937) | 766,175 |
Balance (in shares) at Dec. 31, 2022 | 29,123 | (2,773) | |||
Stock-based compensation expense | 1,853 | 1,853 | |||
Restricted stock units vested (in shares) | 10 | ||||
Shares withheld for taxes paid on stock awards | (213) | (213) | |||
Repurchase of common stock for treasury | $ (3,423) | (3,423) | |||
Repurchase of common stock for treasury (in shares) | (79) | ||||
Dividend declaration | (2,107) | (2,107) | |||
Net income | 14,198 | 14,198 | |||
Balance at Mar. 31, 2023 | $ 291 | $ 127,424 | $ 698,128 | $ (49,360) | $ 776,483 |
Balance (in shares) at Mar. 31, 2023 | 29,133 | (2,852) |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) | 3 Months Ended |
Mar. 31, 2023 $ / shares | |
Consolidated Statement of Changes in Stockholders' Equity | |
Dividend declaration | $ 0.08 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows provided by Operating Activities: | ||
Net income | $ 14,198 | $ 21,792 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,073 | 2,991 |
Adjustments to credit losses reserve | (99) | 567 |
Stock-based compensation expense | 1,853 | 1,382 |
Loss on disposal of fixed assets | 474 | 10 |
Changes in assets and liabilities: | ||
Accounts receivable | (11,465) | (27,177) |
Inventories | 9,365 | (28,046) |
Prepaid expenses and other current assets | (6,245) | (4,572) |
Other non-current assets | 42 | 32 |
Accounts payable | 5,859 | (10,494) |
Accrued expenses and other liabilities | 2,450 | 5,230 |
Net cash provided by (used in) operating activities | 19,505 | (38,285) |
Cash Flows used in Investing Activities: | ||
Purchases of equipment and capitalized software | (1,882) | (2,451) |
Net cash used in investing activities | (1,882) | (2,451) |
Cash Flows used in Financing Activities: | ||
Proceeds from short-term borrowings | 59,310 | 1,385 |
Repayment of short-term borrowings | (59,310) | (1,385) |
Purchase of common stock for treasury shares | (3,423) | |
Dividend payments | (2,107) | |
Payments of payroll taxes on stock-based compensation through shares withheld | (213) | (165) |
Net cash used in financing activities | (5,743) | (165) |
Increase (decrease) in cash and cash equivalents | 11,880 | (40,901) |
Cash and cash equivalents, beginning of year | 122,930 | 108,310 |
Cash and cash equivalents, end of period | 134,810 | 67,409 |
Non-cash Investing and Financing Activities: | ||
Accrued capital expenditures | 753 | 266 |
Supplemental Cash Flow Information: | ||
Income taxes paid | 7,279 | $ 287 |
Interest paid | $ 17 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation | |
Basis of Presentation | Note 1–Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries, or the Company, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting and in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Such principles were applied on a basis consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three months ended March 31, 2023 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2023. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions. Restructuring and Other Charges The restructuring and other charges recorded in the first quarter of 2023 were primarily related to an involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits. These costs will be paid within a year of termination and any unpaid balances are included in accrued expenses as of March 31, 2023. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended March 31, 2023 2022 Employee separations $ 698 $ — Other charges 199 — Total restructuring and other charges $ 897 $ — Included in accrued expenses and other liabilities as of March 31, 2023 was $308 related to unpaid termination benefits. Recently Issued Financial Accounting Standards In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2023 | |
Revenue | |
Revenue | Note 2–Revenue The Company disaggregates revenue from its arrangements with customers by type of products and services, as it believes this method best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended March 31, 2023 and 2022, along with the segment for each category (in thousands). Three Months Ended March 31, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 94,919 $ 114,318 $ 51,774 $ 261,011 Desktops 18,762 30,142 14,417 63,321 Software 34,576 39,234 9,917 83,727 Servers/Storage 24,291 12,507 9,987 46,785 Net/Com Products 28,304 20,532 13,320 62,156 Displays and Sound 22,813 26,720 13,202 62,735 Accessories 28,735 47,594 13,473 89,802 Other Hardware/Services 20,714 22,896 14,398 58,008 Total net sales $ 273,114 $ 313,943 $ 140,488 $ 727,545 Three Months Ended March 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 130,434 $ 121,339 $ 56,850 $ 308,623 Desktops 23,559 44,864 17,988 86,411 Software 34,908 21,010 5,269 61,187 Servers/Storage 22,164 15,371 9,630 47,165 Net/Com Products 22,627 22,191 8,027 52,845 Displays and Sound 32,824 37,079 13,423 83,326 Accessories 32,241 48,007 12,932 93,180 Other Hardware/Services 21,687 25,535 8,385 55,607 Total net sales $ 320,444 $ 335,396 $ 132,504 $ 788,344 Contract Balances The following table provides information about contract liabilities from arrangements with customers as of March 31, 2023 and December 31, 2022 (in thousands). March 31, 2023 December 31, 2022 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 7,534 $ 4,266 Changes in the contract liability balances during the three months ended March 31, 2023 and 2022 are as follows (in thousands): 2023 Balance at December 31, 2022 $ 4,266 Cash received in advance and not recognized as revenue 7,656 Amounts recognized as revenue as performance obligations satisfied (4,388) Balance at March 31, 2023 $ 7,534 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 3,870 Amounts recognized as revenue as performance obligations satisfied (5,455) Balance at March 31, 2022 $ 7,043 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Earnings Per Share | Note 3–Earnings Per Share Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributable to non-vested stock units and stock options outstanding, if dilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended March 31, 2023 2022 Numerator: Net income $ 14,198 $ 21,792 Denominator: Denominator for basic earnings per share 26,325 26,255 Dilutive effect of employee stock awards 111 150 Denominator for diluted earnings per share 26,436 26,405 Earnings per share: Basic $ 0.54 $ 0.83 Diluted $ 0.54 $ 0.83 For the three months ended March 31, 2023 and 2022, the Company had no outstanding non-vested stock units that were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | Note 4 – Leases The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership. Included in the right-of-use, or ROU, asset as of March 31, 2023 was $826 and a corresponding lease liability of $826 associated with related party leases. As of March 31, 2023, there were no additional operating leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the three months ended March 31, 2023 and 2022 (dollars in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 709 $ 1,022 $ 313 $ 709 $ 1,022 Short-term lease cost 107 21 128 107 21 128 Total lease cost $ 420 $ 730 $ 1,150 $ 420 $ 730 $ 1,150 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 643 $ 956 $ 313 $ 687 $ 1,000 Weighted-average remaining lease term (in years): Capitalized operating leases 0.67 3.81 3.45 1.67 4.34 3.79 Weighted-average discount rate: Capitalized operating leases 3.92% 4.06% 4.04% 3.92% 3.91% 3.92% As of March 31, 2023, For the Years Ended December 31, Related Parties Others Total 2023, excluding the three months ended March 31, 2023 $ 958 $ 1,495 $ 2,453 2024 163 1,697 1,860 2025 163 1,635 1,798 2026 163 952 1,115 2027 1 232 233 Thereafter — 340 340 $ 1,448 $ 6,351 $ 7,799 Imputed interest (516) Lease liability balance at March 31, 2023 $ 7,283 As of March 31, 2023, the ROU asset had a balance of $6,611. The long-term lease liability was $4,623 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $2,660. As of March 31, 2022, the ROU asset had a balance of $9,201. The long-term lease liability was $6,077 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,777. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Segment Information | Note 5–Segment Information The internal reporting structure used by the Company’s chief operating decision maker, or CODM, to assess performance and allocate resources determines the basis for the Company’s operating segments. The Company’s CODM is its Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of operating income. The Company’s operations are organized under three segments—the Business Solutions segment, which serves primarily small- to medium-sized businesses; the Enterprise Solutions segment, which serves primarily medium-to-large corporations; and the Public Sector Solutions segment, which serves primarily federal, state, and local government and educational institutions. In addition, the Headquarters/Other group provides services in areas such as finance, human resources, information technology, or IT, marketing, and product management. Most of the operating costs associated with the Headquarters/Other group functions are charged to the operating segments based on their estimated usage of the underlying functions. The Company reports these charges to the operating segments as “Allocations”. Certain headquarters costs relating to executive oversight and other fiduciary functions that are not allocated to the operating segments are included under the heading of Headquarters/Other in the tables below. Net sales presented below exclude inter-segment product revenues. Segment information applicable to the Company’s operating segments for the three months ended March 31, 2023 and 2022 is shown below (in thousands): Three Months Ended March 31, March 31, 2023 2022 Net sales: Business Solutions $ 273,114 $ 320,444 Enterprise Solutions 313,943 335,396 Public Sector Solutions 140,488 132,504 Total net sales $ 727,545 $ 788,344 Operating income (loss): Business Solutions $ 16,553 $ 20,673 Enterprise Solutions 6,522 14,314 Public Sector Solutions 29 (1,126) Headquarters/Other (4,987) (3,727) Total operating income 18,117 30,134 Other income (expense), net 1,286 (3) Income before taxes $ 19,403 $ 30,131 Selected operating expense: Depreciation and amortization: Business Solutions $ 159 $ 167 Enterprise Solutions 424 534 Public Sector Solutions 19 20 Headquarters/Other 2,471 2,270 Total depreciation and amortization $ 3,073 $ 2,991 Total assets: Business Solutions $ 467,444 $ 426,103 Enterprise Solutions 661,670 651,905 Public Sector Solutions 104,880 94,540 Headquarters/Other (115,937) (71,729) Total assets $ 1,118,057 $ 1,100,819 The assets of the Company’s three operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles. Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash and cash equivalents, inventories, property and equipment, ROU assets, and intercompany balance, net. As of March 31, 2023 and 2022, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $60,176 and $50,234 , respectively. The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade its management information systems. These information systems serve all of the Company’s segments, to varying degrees, and accordingly, the CODM does not evaluate capital expenditures on a segment-by-segment basis. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 6–Commitments and Contingencies The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. The outcome of such matters is not expected to have a material, adverse effect on the Company’s financial position, results of operations, and/or cash flows. The Company is subject to audits by states on sales and income taxes, employment matters, and other assessments. Additional liabilities for these and other audits could be assessed, but such outcomes are not expected to have a material, adverse impact on the Company’s financial position, results of operations, and/or cash flows. |
BANK BORROWINGS
BANK BORROWINGS | 3 Months Ended |
Mar. 31, 2023 | |
Bank Borrowings | |
Bank Borrowings | Note 7–Bank Borrowings The Company has a $50,000 credit facility collateralized by its account receivables that expires March 31, 2025. This facility can be increased, at the Company’s option, to $80,000 for permitted acquisitions or other uses authorized by the lender on substantially the same terms. Amounts outstanding under this facility bear interest at the one-month LIBOR, plus a spread based on the Company’s funded debt ratio, or in the absence of LIBOR, the prime rate (8.00% at March 31, 2023). The credit facility includes various customary financial ratios and operating covenants, including minimum net worth and maximum funded debt ratio requirements, and default acceleration provisions. The credit facility does not include restrictions on future dividend payments. Funded debt ratio is the ratio of average outstanding advances under the credit facility for a given quarter to consolidated trailing twelve months Adjusted Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges, or Adjusted EBITDA. The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0. Decreases in the Company’s consolidated trailing twelve months Adjusted EBITDA could limit its potential borrowing capacity under the credit facility. As of March 31, 2023, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility. During the three months ended March 31, 2023, the Company borrowed $59,310 under the credit facility, which was fully repaid prior to March 31, 2023. The Company had no outstanding borrowings under the credit facility as of March 31, 2023 or 2022, and accordingly, the entire $50,000 credit facility was available for borrowings on such date. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries, or the Company, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting and in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Such principles were applied on a basis consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three months ended March 31, 2023 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2023. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions. |
Restructuring and other charges | Restructuring and Other Charges The restructuring and other charges recorded in the first quarter of 2023 were primarily related to an involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits. These costs will be paid within a year of termination and any unpaid balances are included in accrued expenses as of March 31, 2023. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended March 31, 2023 2022 Employee separations $ 698 $ — Other charges 199 — Total restructuring and other charges $ 897 $ — Included in accrued expenses and other liabilities as of March 31, 2023 was $308 related to unpaid termination benefits. |
Recently Issued Financial Accounting Standards | Recently Issued Financial Accounting Standards In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Basis of Presentation | |
Schedule of restructuring and other charges | Three Months Ended March 31, 2023 2022 Employee separations $ 698 $ — Other charges 199 — Total restructuring and other charges $ 897 $ — |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue | |
Schedule of disaggregation of revenue from contracts with customers | Three Months Ended March 31, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 94,919 $ 114,318 $ 51,774 $ 261,011 Desktops 18,762 30,142 14,417 63,321 Software 34,576 39,234 9,917 83,727 Servers/Storage 24,291 12,507 9,987 46,785 Net/Com Products 28,304 20,532 13,320 62,156 Displays and Sound 22,813 26,720 13,202 62,735 Accessories 28,735 47,594 13,473 89,802 Other Hardware/Services 20,714 22,896 14,398 58,008 Total net sales $ 273,114 $ 313,943 $ 140,488 $ 727,545 Three Months Ended March 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 130,434 $ 121,339 $ 56,850 $ 308,623 Desktops 23,559 44,864 17,988 86,411 Software 34,908 21,010 5,269 61,187 Servers/Storage 22,164 15,371 9,630 47,165 Net/Com Products 22,627 22,191 8,027 52,845 Displays and Sound 32,824 37,079 13,423 83,326 Accessories 32,241 48,007 12,932 93,180 Other Hardware/Services 21,687 25,535 8,385 55,607 Total net sales $ 320,444 $ 335,396 $ 132,504 $ 788,344 |
Schedule of changes in contract liability balances | March 31, 2023 December 31, 2022 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 7,534 $ 4,266 Changes in the contract liability balances during the three months ended March 31, 2023 and 2022 are as follows (in thousands): 2023 Balance at December 31, 2022 $ 4,266 Cash received in advance and not recognized as revenue 7,656 Amounts recognized as revenue as performance obligations satisfied (4,388) Balance at March 31, 2023 $ 7,534 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 3,870 Amounts recognized as revenue as performance obligations satisfied (5,455) Balance at March 31, 2022 $ 7,043 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | Three Months Ended March 31, 2023 2022 Numerator: Net income $ 14,198 $ 21,792 Denominator: Denominator for basic earnings per share 26,325 26,255 Dilutive effect of employee stock awards 111 150 Denominator for diluted earnings per share 26,436 26,405 Earnings per share: Basic $ 0.54 $ 0.83 Diluted $ 0.54 $ 0.83 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of lease cost | Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 709 $ 1,022 $ 313 $ 709 $ 1,022 Short-term lease cost 107 21 128 107 21 128 Total lease cost $ 420 $ 730 $ 1,150 $ 420 $ 730 $ 1,150 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 643 $ 956 $ 313 $ 687 $ 1,000 Weighted-average remaining lease term (in years): Capitalized operating leases 0.67 3.81 3.45 1.67 4.34 3.79 Weighted-average discount rate: Capitalized operating leases 3.92% 4.06% 4.04% 3.92% 3.91% 3.92% |
Schedule of future lease payments on capitalized operating leases | For the Years Ended December 31, Related Parties Others Total 2023, excluding the three months ended March 31, 2023 $ 958 $ 1,495 $ 2,453 2024 163 1,697 1,860 2025 163 1,635 1,798 2026 163 952 1,115 2027 1 232 233 Thereafter — 340 340 $ 1,448 $ 6,351 $ 7,799 Imputed interest (516) Lease liability balance at March 31, 2023 $ 7,283 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Segment information applicable to reportable operating segments | Three Months Ended March 31, March 31, 2023 2022 Net sales: Business Solutions $ 273,114 $ 320,444 Enterprise Solutions 313,943 335,396 Public Sector Solutions 140,488 132,504 Total net sales $ 727,545 $ 788,344 Operating income (loss): Business Solutions $ 16,553 $ 20,673 Enterprise Solutions 6,522 14,314 Public Sector Solutions 29 (1,126) Headquarters/Other (4,987) (3,727) Total operating income 18,117 30,134 Other income (expense), net 1,286 (3) Income before taxes $ 19,403 $ 30,131 Selected operating expense: Depreciation and amortization: Business Solutions $ 159 $ 167 Enterprise Solutions 424 534 Public Sector Solutions 19 20 Headquarters/Other 2,471 2,270 Total depreciation and amortization $ 3,073 $ 2,991 Total assets: Business Solutions $ 467,444 $ 426,103 Enterprise Solutions 661,670 651,905 Public Sector Solutions 104,880 94,540 Headquarters/Other (115,937) (71,729) Total assets $ 1,118,057 $ 1,100,819 |
BASIS OF PRESENTATION - Restruc
BASIS OF PRESENTATION - Restructuring and Other Charges (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring and other charges | |
Restructuring and other charges | $ 897 |
Accrued employee termination benefits | 308 |
Employee separations | |
Restructuring and other charges | |
Restructuring and other charges | 698 |
Other charges | |
Restructuring and other charges | |
Restructuring and other charges | $ 199 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of revenue | ||
Net sales | $ 727,545 | $ 788,344 |
Notebooks/Mobility | ||
Disaggregation of revenue | ||
Net sales | 261,011 | 308,623 |
Desktops | ||
Disaggregation of revenue | ||
Net sales | 63,321 | 86,411 |
Software | ||
Disaggregation of revenue | ||
Net sales | 83,727 | 61,187 |
Servers/Storage | ||
Disaggregation of revenue | ||
Net sales | 46,785 | 47,165 |
Net/Com Products | ||
Disaggregation of revenue | ||
Net sales | 62,156 | 52,845 |
Displays and Sound | ||
Disaggregation of revenue | ||
Net sales | 62,735 | 83,326 |
Accessories | ||
Disaggregation of revenue | ||
Net sales | 89,802 | 93,180 |
Other Hardware/Services | ||
Disaggregation of revenue | ||
Net sales | 58,008 | 55,607 |
Business Solutions | ||
Disaggregation of revenue | ||
Net sales | 273,114 | 320,444 |
Business Solutions | Notebooks/Mobility | ||
Disaggregation of revenue | ||
Net sales | 94,919 | 130,434 |
Business Solutions | Desktops | ||
Disaggregation of revenue | ||
Net sales | 18,762 | 23,559 |
Business Solutions | Software | ||
Disaggregation of revenue | ||
Net sales | 34,576 | 34,908 |
Business Solutions | Servers/Storage | ||
Disaggregation of revenue | ||
Net sales | 24,291 | 22,164 |
Business Solutions | Net/Com Products | ||
Disaggregation of revenue | ||
Net sales | 28,304 | 22,627 |
Business Solutions | Displays and Sound | ||
Disaggregation of revenue | ||
Net sales | 22,813 | 32,824 |
Business Solutions | Accessories | ||
Disaggregation of revenue | ||
Net sales | 28,735 | 32,241 |
Business Solutions | Other Hardware/Services | ||
Disaggregation of revenue | ||
Net sales | 20,714 | 21,687 |
Enterprise Solutions | ||
Disaggregation of revenue | ||
Net sales | 313,943 | 335,396 |
Enterprise Solutions | Notebooks/Mobility | ||
Disaggregation of revenue | ||
Net sales | 114,318 | 121,339 |
Enterprise Solutions | Desktops | ||
Disaggregation of revenue | ||
Net sales | 30,142 | 44,864 |
Enterprise Solutions | Software | ||
Disaggregation of revenue | ||
Net sales | 39,234 | 21,010 |
Enterprise Solutions | Servers/Storage | ||
Disaggregation of revenue | ||
Net sales | 12,507 | 15,371 |
Enterprise Solutions | Net/Com Products | ||
Disaggregation of revenue | ||
Net sales | 20,532 | 22,191 |
Enterprise Solutions | Displays and Sound | ||
Disaggregation of revenue | ||
Net sales | 26,720 | 37,079 |
Enterprise Solutions | Accessories | ||
Disaggregation of revenue | ||
Net sales | 47,594 | 48,007 |
Enterprise Solutions | Other Hardware/Services | ||
Disaggregation of revenue | ||
Net sales | 22,896 | 25,535 |
Public Sector Solutions | ||
Disaggregation of revenue | ||
Net sales | 140,488 | 132,504 |
Public Sector Solutions | Notebooks/Mobility | ||
Disaggregation of revenue | ||
Net sales | 51,774 | 56,850 |
Public Sector Solutions | Desktops | ||
Disaggregation of revenue | ||
Net sales | 14,417 | 17,988 |
Public Sector Solutions | Software | ||
Disaggregation of revenue | ||
Net sales | 9,917 | 5,269 |
Public Sector Solutions | Servers/Storage | ||
Disaggregation of revenue | ||
Net sales | 9,987 | 9,630 |
Public Sector Solutions | Net/Com Products | ||
Disaggregation of revenue | ||
Net sales | 13,320 | 8,027 |
Public Sector Solutions | Displays and Sound | ||
Disaggregation of revenue | ||
Net sales | 13,202 | 13,423 |
Public Sector Solutions | Accessories | ||
Disaggregation of revenue | ||
Net sales | 13,473 | 12,932 |
Public Sector Solutions | Other Hardware/Services | ||
Disaggregation of revenue | ||
Net sales | $ 14,398 | $ 8,385 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Change in contract liability | |||
Beginning balance - Contract liability | $ 4,266 | $ 8,628 | |
Cash received in advance and not recognized as revenue | 7,656 | 3,870 | |
Amounts recognized as revenue as performance obligations satisfied | (4,388) | (5,455) | |
Ending balance - Contract liability | 7,534 | $ 7,043 | |
Accrued expenses and other liabilities | |||
Contract liabilities | |||
Contract liabilities | $ 7,534 | $ 4,266 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net income | $ 14,198 | $ 21,792 |
Denominator: | ||
Denominator for basic earnings per share | 26,325 | 26,255 |
Dilutive effect of unvested employee stock awards | 111 | 150 |
Denominator for diluted earnings per share | 26,436 | 26,405 |
Earnings per share: | ||
Basic | $ 0.54 | $ 0.83 |
Diluted | $ 0.54 | $ 0.83 |
Additional Disclosure | ||
Employee stock awards excluded from computation of diluted earnings per share | 0 | 0 |
LEASES - Lease Cost and Other I
LEASES - Lease Cost and Other Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 USD ($) lease | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Leases | |||
Right-of-use assets | $ 6,611 | $ 9,201 | $ 7,558 |
Lease liability | $ 7,283 | ||
Number of additional operating or financing leases not yet commenced | lease | 0 | ||
Lease Cost | |||
Capitalized operating lease cost | $ 1,022 | 1,022 | |
Short-term lease cost | 128 | 128 | |
Total lease cost | 1,150 | 1,150 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||
Operating cash flows | $ 956 | $ 1,000 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 5 months 12 days | 3 years 9 months 14 days | |
Weighted-average discount rate - Capitalized operating leases | 4.04% | 3.92% | |
Related Parties | |||
Leases | |||
Right-of-use assets | $ 826 | ||
Lease liability | 826 | ||
Lease Cost | |||
Capitalized operating lease cost | 313 | $ 313 | |
Short-term lease cost | 107 | 107 | |
Total lease cost | 420 | 420 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||
Operating cash flows | $ 313 | $ 313 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 8 months 1 day | 1 year 8 months 1 day | |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% | |
Others | |||
Lease Cost | |||
Capitalized operating lease cost | $ 709 | $ 709 | |
Short-term lease cost | 21 | 21 | |
Total lease cost | 730 | 730 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||
Operating cash flows | $ 643 | $ 687 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 9 months 21 days | 4 years 4 months 2 days | |
Weighted-average discount rate - Capitalized operating leases | 4.06% | 3.91% |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Future lease payments over the remaining term of capitalized operating leases | |||
2023, excluding the three months ended March 31, 2023 | $ 2,453 | ||
2024 | 1,860 | ||
2025 | 1,798 | ||
2026 | 1,115 | ||
2027 | 233 | ||
Thereafter | 340 | ||
Total | 7,799 | ||
Imputed interest | (516) | ||
Lease liability balance | 7,283 | ||
Right-of-use assets | 6,611 | $ 7,558 | $ 9,201 |
Long-term lease liability | 4,623 | $ 4,994 | 6,077 |
Short-term lease liability | $ 2,660 | $ 3,777 | |
Current operating lease liability, Statement of Financial Position | Accrued expenses and other liabilities | Accrued expenses and other liabilities | |
Related Parties | |||
Future lease payments over the remaining term of capitalized operating leases | |||
2023, excluding the three months ended March 31, 2023 | $ 958 | ||
2024 | 163 | ||
2025 | 163 | ||
2026 | 163 | ||
2027 | 1 | ||
Total | 1,448 | ||
Lease liability balance | 826 | ||
Right-of-use assets | 826 | ||
Others | |||
Future lease payments over the remaining term of capitalized operating leases | |||
2023, excluding the three months ended March 31, 2023 | 1,495 | ||
2024 | 1,697 | ||
2025 | 1,635 | ||
2026 | 952 | ||
2027 | 232 | ||
Thereafter | 340 | ||
Total | $ 6,351 |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) segment | Dec. 31, 2022 USD ($) | |
Segment Reporting Information | |||
Number of reportable segments | segment | 3 | 3 | |
Number of operating segments | segment | 3 | 3 | |
Net sales: | |||
Net sales | $ 727,545 | $ 788,344 | |
Operating income (loss): | |||
Operating income (loss) | 18,117 | 30,134 | |
Other expenses, net | 1,286 | (3) | |
Income before taxes | 19,403 | 30,131 | |
Depreciation and amortization: | |||
Depreciation and amortization | 3,073 | 2,991 | |
Total assets: | |||
Total assets | 1,118,057 | 1,100,819 | $ 1,099,826 |
Business Solutions | |||
Net sales: | |||
Net sales | 273,114 | 320,444 | |
Enterprise Solutions | |||
Net sales: | |||
Net sales | 313,943 | 335,396 | |
Public Sector Solutions | |||
Net sales: | |||
Net sales | 140,488 | 132,504 | |
Operating Segments | Business Solutions | |||
Net sales: | |||
Net sales | 273,114 | 320,444 | |
Operating income (loss): | |||
Operating income (loss) | 16,553 | 20,673 | |
Depreciation and amortization: | |||
Depreciation and amortization | 159 | 167 | |
Total assets: | |||
Total assets | 467,444 | 426,103 | |
Operating Segments | Enterprise Solutions | |||
Net sales: | |||
Net sales | 313,943 | 335,396 | |
Operating income (loss): | |||
Operating income (loss) | 6,522 | 14,314 | |
Depreciation and amortization: | |||
Depreciation and amortization | 424 | 534 | |
Total assets: | |||
Total assets | 661,670 | 651,905 | |
Operating Segments | Public Sector Solutions | |||
Net sales: | |||
Net sales | 140,488 | 132,504 | |
Operating income (loss): | |||
Operating income (loss) | 29 | (1,126) | |
Depreciation and amortization: | |||
Depreciation and amortization | 19 | 20 | |
Total assets: | |||
Total assets | 104,880 | 94,540 | |
Headquarters/Other | |||
Operating income (loss): | |||
Operating income (loss) | (4,987) | (3,727) | |
Depreciation and amortization: | |||
Depreciation and amortization | 2,471 | 2,270 | |
Total assets: | |||
Assets net of intercompany balance eliminations | (115,937) | (71,729) | |
Intersegment Elimination | |||
Total assets: | |||
Total assets | $ (60,176) | $ (50,234) |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Subordinated Borrowing | ||
Line of credit, borrowing capacity | $ 50,000 | |
Credit facility, expiration date | Mar. 31, 2025 | |
Line of credit, maximum borrowing capacity | $ 80,000 | |
Proceeds from short-term borrowings | 59,310 | $ 1,385 |
Line of credit, outstanding borrowing | 0 | 0 |
Line of credit, available for borrowing | $ 50,000 | $ 50,000 |
Maximum | ||
Subordinated Borrowing | ||
Debt ratio | 2 | |
Prime Rate | ||
Subordinated Borrowing | ||
Debt instrument, interest rate | 8% |