Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 25, 2023 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 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, $0.01 par value | |
Trading Symbol | CNXN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,271,521 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001050377 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 240,509 | $ 122,930 |
Short-term investments | 48,894 | |
Accounts receivable, net | 587,597 | 610,280 |
Inventories, net | 142,243 | 208,682 |
Income taxes receivable | 7,388 | |
Prepaid expenses and other current assets | 14,068 | 11,900 |
Total current assets | 1,040,699 | 953,792 |
Property and equipment, net | 57,638 | 59,171 |
Right-of-use assets | 4,934 | 7,558 |
Goodwill | 73,602 | 73,602 |
Intangible, net | 3,733 | 4,648 |
Other assets | 821 | 1,055 |
Total Assets | 1,181,427 | 1,099,826 |
Current Liabilities: | ||
Accounts payable | 264,502 | 232,638 |
Accrued payroll | 26,363 | 24,071 |
Accrued expenses and other liabilities | 49,098 | 53,808 |
Total current liabilities | 339,963 | 310,517 |
Deferred income taxes | 18,011 | 17,970 |
Noncurrent operating lease liabilities | 3,638 | 4,994 |
Other liabilities | 654 | 170 |
Total Liabilities | 362,266 | 333,651 |
Stockholders' Equity: | ||
Common stock | 292 | 291 |
Additional paid-in capital | 130,875 | 125,784 |
Retained earnings | 739,223 | 686,037 |
Accumulated other comprehensive income | 154 | |
Treasury stock, at cost | (51,383) | (45,937) |
Total Stockholders' Equity | 819,161 | 766,175 |
Total Liabilities and Stockholders' Equity | $ 1,181,427 | $ 1,099,826 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements of Income | ||||
Net sales | $ 693,086 | $ 775,692 | $ 2,154,178 | $ 2,392,545 |
Cost of sales | 561,198 | 639,066 | 1,772,217 | 1,990,712 |
Gross profit | 131,888 | 136,626 | 381,961 | 401,833 |
Selling, general and administrative expenses | 99,822 | 104,887 | 304,064 | 305,189 |
Restructuring and other charges | 44 | 2,687 | ||
Income from operations | 32,022 | 31,739 | 75,210 | 96,644 |
Other income, net | 2,688 | 308 | 5,848 | 319 |
Income before taxes | 34,710 | 32,047 | 81,058 | 96,963 |
Income tax provision | (9,112) | (8,841) | (21,565) | (26,567) |
Net income | $ 25,598 | $ 23,206 | $ 59,493 | $ 70,396 |
Earnings per common share: | ||||
Basic | $ 0.97 | $ 0.88 | $ 2.26 | $ 2.68 |
Diluted | $ 0.97 | $ 0.88 | $ 2.25 | $ 2.66 |
Shares used in computation of earnings per common share: | ||||
Basic | 26,262 | 26,279 | 26,281 | 26,267 |
Diluted | 26,434 | 26,455 | 26,406 | 26,432 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Condensed Consolidated Statements Of Other Comprehensive Income | ||||
Net Income (Loss) | $ 25,598 | $ 23,206 | $ 59,493 | $ 70,396 |
Other comprehensive income | ||||
Unrealized gains on available-for-sale investments, net of tax of $(41) | 154 | 154 | ||
Comprehensive income | $ 25,752 | $ 23,206 | $ 59,647 | $ 70,396 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Condensed Consolidated Statements Of Other Comprehensive Income | ||
Unrealized gains on available-for-sale investments, tax | $ (41) | $ (41) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | 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 | |||||
Balance - Treasury Shares (in shares) at Dec. 31, 2021 | (2,773) | |||||
Stock-based compensation expense | 4,072 | 4,072 | ||||
Restricted stock units vested | $ 1 | (1) | ||||
Restricted stock units vested (in shares) | 36 | |||||
Shares withheld for taxes paid on stock awards | (834) | (834) | ||||
Net Income (Loss) | 70,396 | 70,396 | ||||
Balance at Sep. 30, 2022 | $ 291 | 125,591 | 676,162 | $ (45,937) | 756,107 | |
Balance (in shares) at Sep. 30, 2022 | 29,061 | |||||
Balance - Treasury Shares (in shares) at Sep. 30, 2022 | (2,773) | |||||
Balance at Jun. 30, 2022 | $ 290 | 124,690 | 652,956 | $ (45,937) | 731,999 | |
Balance (in shares) at Jun. 30, 2022 | 29,045 | |||||
Balance - Treasury Shares (in shares) at Jun. 30, 2022 | (2,773) | |||||
Stock-based compensation expense | 1,282 | 1,282 | ||||
Restricted stock units vested | $ 1 | (1) | ||||
Restricted stock units vested (in shares) | 16 | |||||
Shares withheld for taxes paid on stock awards | (380) | (380) | ||||
Net Income (Loss) | 23,206 | 23,206 | ||||
Balance at Sep. 30, 2022 | $ 291 | 125,591 | 676,162 | $ (45,937) | 756,107 | |
Balance (in shares) at Sep. 30, 2022 | 29,061 | |||||
Balance - Treasury Shares (in shares) at Sep. 30, 2022 | (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 | |||||
Balance - Treasury Shares (in shares) at Dec. 31, 2022 | (2,773) | |||||
Issuance of common stock under Employee Stock Purchase Plan | 537 | 537 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 13 | |||||
Stock-based compensation expense | 5,425 | 5,425 | ||||
Restricted stock units vested | $ 1 | (1) | ||||
Restricted stock units vested (in shares) | 38 | |||||
Shares withheld for taxes paid on stock awards | (870) | (870) | ||||
Repurchase of common stock for treasury | $ (5,446) | (5,446) | ||||
Repurchase of common stock for treasury (in shares) | (129) | |||||
Dividend declaration | (6,307) | (6,307) | ||||
Net Income (Loss) | 59,493 | 59,493 | ||||
Other comprehensive income, net of tax | $ 154 | 154 | ||||
Balance at Sep. 30, 2023 | $ 292 | 130,875 | 739,223 | 154 | $ (51,383) | 819,161 |
Balance (in shares) at Sep. 30, 2023 | 29,174 | |||||
Balance - Treasury Shares (in shares) at Sep. 30, 2023 | (2,902) | |||||
Balance at Jun. 30, 2023 | $ 291 | 129,486 | 715,726 | $ (51,383) | 794,120 | |
Balance (in shares) at Jun. 30, 2023 | 29,158 | |||||
Balance - Treasury Shares (in shares) at Jun. 30, 2023 | (2,902) | |||||
Stock-based compensation expense | 1,789 | 1,789 | ||||
Restricted stock units vested | $ 1 | (1) | ||||
Restricted stock units vested (in shares) | 16 | |||||
Shares withheld for taxes paid on stock awards | (399) | (399) | ||||
Dividend declaration | (2,101) | (2,101) | ||||
Net Income (Loss) | 25,598 | 25,598 | ||||
Other comprehensive income, net of tax | 154 | 154 | ||||
Balance at Sep. 30, 2023 | $ 292 | $ 130,875 | $ 739,223 | $ 154 | $ (51,383) | $ 819,161 |
Balance (in shares) at Sep. 30, 2023 | 29,174 | |||||
Balance - Treasury Shares (in shares) at Sep. 30, 2023 | (2,902) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Condensed Consolidated Statement of Changes in Stockholders' Equity | ||
Dividend declaration | $ 0.08 | $ 0.08 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows provided by (used in) Operating Activities: | ||
Net income | $ 59,493 | $ 70,396 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 9,456 | 9,000 |
Adjustments to credit losses reserve | 1,814 | 2,658 |
Stock-based compensation expense | 5,425 | 4,072 |
Loss on disposal of fixed assets | 563 | 16 |
Changes in assets and liabilities: | ||
Accounts receivable | 20,869 | (41,782) |
Inventories | 66,439 | (6,761) |
Prepaid expenses, income tax receivable, and other current assets | (9,556) | (79) |
Other non-current assets | 234 | 5 |
Accounts payable | 31,648 | (23,268) |
Accrued expenses and other liabilities | (720) | 1,432 |
Net cash provided by operating activities | 185,665 | 15,689 |
Cash Flows used in Investing Activities: | ||
Purchases of short-term investments | (48,699) | |
Purchases of property and equipment | (7,355) | (6,975) |
Net cash used in investing activities | (56,054) | (6,975) |
Cash Flows used in Financing Activities: | ||
Proceeds from short-term borrowings | 70,877 | 36,463 |
Repayment of short-term borrowings | (70,877) | (36,463) |
Purchase of common stock for treasury shares | (5,392) | |
Dividend payments | (6,307) | |
Issuance of stock under Employee Stock Purchase Plan | 537 | |
Payments of payroll taxes on stock-based compensation through shares withheld | (870) | (834) |
Net cash used in financing activities | (12,032) | (834) |
Increase in cash and cash equivalents | 117,579 | 7,880 |
Cash and cash equivalents, beginning of year | 122,930 | 108,310 |
Cash and cash equivalents, end of period | 240,509 | 116,190 |
Non-cash Investing and Financing Activities: | ||
Accrued purchases of property and equipment | 408 | 362 |
Accrued excise tax on treasury purchases | 54 | |
Supplemental Cash Flow Information: | ||
Income taxes paid | 34,251 | 30,759 |
Interest paid | $ 19 | $ 4 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 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 unaudited 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 and nine months ended September 30, 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. Cash and Cash Equivalents The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. All of the Company’s investments are classified as available-for-sale. The Company classifies investments as short-term when their remaining contractual maturities are one year or less from the balance sheet date, and as long-term when the investment has a remaining contractual maturity of more than one year from the balance sheet date. The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. Treasury Stock, at Cost The total repurchases for the nine months ended September 30, 2023 were recorded as treasury stock of $5,446. Such cost reflects the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022. Restructuring and Other Charges The restructuring and other charges recorded for the three and nine months ended September 30, 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 and other liabilities in the consolidated balance sheets as of September 30, 2023. The Company is currently evaluating additional restructuring activities for the fourth quarter of 2023 and beyond. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Employee separations $ 17 $ — $ 2,416 $ — Other charges 27 — 271 — Total restructuring and other charges $ 44 $ — $ 2,687 $ — Included in accrued expenses and other liabilities as of September 30, 2023 was $772 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 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 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 September 30, 2023 and 2022, along with the segment for each category (in thousands). Three Months Ended September 30, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 82,777 $ 91,643 $ 46,898 $ 221,318 Desktops 17,695 32,822 16,281 66,798 Software 34,863 29,158 13,287 77,308 Servers/Storage 25,863 13,153 11,307 50,323 Net/Com Products 38,672 25,699 17,964 82,335 Displays and Sound 24,299 26,175 20,367 70,841 Accessories 26,335 32,501 12,590 71,426 Other Hardware/Services 18,517 25,415 8,805 52,737 Total net sales $ 269,021 $ 276,566 $ 147,499 $ 693,086 Three Months Ended September 30, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 120,689 $ 95,017 $ 60,960 $ 276,666 Desktops 21,151 37,045 13,113 71,309 Software 36,965 36,996 12,186 86,147 Servers/Storage 27,016 15,857 12,213 55,086 Net/Com Products 27,732 19,625 8,189 55,546 Displays and Sound 28,377 30,011 20,633 79,021 Accessories 33,007 46,051 17,808 96,866 Other Hardware/Services 20,879 24,908 9,264 55,051 Total net sales $ 315,816 $ 305,510 $ 154,366 $ 775,692 The following tables represent a disaggregation of revenue from arrangements with customers for the nine months ended September 30, 2023 and 2022, along with the segment for each category (in thousands). Nine Months Ended September 30, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 265,777 $ 293,551 $ 172,903 $ 732,231 Desktops 55,468 96,536 48,669 200,673 Software 103,267 85,953 36,263 225,483 Servers/Storage 72,759 44,365 33,253 150,377 Net/Com Products 95,560 74,958 53,517 224,035 Displays and Sound 70,766 80,217 50,354 201,337 Accessories 81,576 121,190 42,551 245,317 Other Hardware/Services 57,989 80,892 35,844 174,725 Total net sales $ 803,162 $ 877,662 $ 473,354 $ 2,154,178 Nine Months Ended September 30, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 374,298 $ 333,764 $ 185,021 $ 893,083 Desktops 68,459 134,541 44,368 247,368 Software 111,440 79,578 27,963 218,981 Servers/Storage 78,878 43,085 31,441 153,404 Net/Com Products 74,789 66,060 22,856 163,705 Displays and Sound 92,170 104,822 53,263 250,255 Accessories 100,904 151,786 46,423 299,113 Other Hardware/Services 63,672 76,225 26,739 166,636 Total net sales $ 964,610 $ 989,861 $ 438,074 $ 2,392,545 Contract Balances The following table provides information about contract liabilities from arrangements with customers as of September 30, 2023 and December 31, 2022 (in thousands). September 30, 2023 December 31, 2022 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 3,826 $ 4,266 Changes in the contract liability balances during the nine months ended September 30, 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 15,207 Amounts recognized as revenue as performance obligations satisfied (15,647) Balance at September 30, 2023 $ 3,826 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 18,943 Amounts recognized as revenue as performance obligations satisfied (22,544) Balance at September 30, 2022 $ 5,027 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3–Fair Value Measurements Cash equivalents and short-term investments consist of the following (in thousands): September 30, 2023 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and cash equivalents: Money market funds $ 167,852 $ — $ — $ 167,852 U.S. Government treasury securities 49,368 — — 49,368 Short-term investments: U.S. Government treasury securities 48,699 195 — 48,894 Total $ 265,919 $ 195 $ — $ 266,114 December 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and cash equivalents: Money market funds $ 96,386 $ — $ — $ 96,386 Total $ 96,386 $ — $ — $ 96,386 Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with maturities of one year or greater from the date of purchase are generally classified as long-term investments. All short-term investments had stated maturity dates of less than one year. The Company has recorded the securities at fair value in its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income. The amount of realized gains and losses reclassified into earnings and the related adjustments to deferred taxes are based on the specific identification of the securities sold or securities that reached maturity date. Fair Value The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows: ● Level 1 inputs: Quoted prices for identical assets or liabilities in active markets; ● Level 2 inputs: Observable inputs other than those described as Level 1; and ● Level 3 inputs: Unobservable inputs that are supported by little or no market activities and are based on significant assumptions and estimates. As of September 30, 2023 and December 31, 2022, the fair value of the Company’s investments were all measured using level 1 inputs. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Earnings Per Share | Note 4–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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income $ 25,598 $ 23,206 $ 59,493 $ 70,396 Denominator: Denominator for basic earnings per share 26,262 26,279 26,281 26,267 Dilutive effect of employee stock awards 172 176 125 165 Denominator for diluted earnings per share 26,434 26,455 26,406 26,432 Earnings per share: Basic $ 0.97 $ 0.88 $ 2.26 $ 2.68 Diluted $ 0.97 $ 0.88 $ 2.25 $ 2.66 For the three and nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | Note 5 – 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 September 30, 2023 was $209 and a corresponding lease liability of $209 associated with related party leases. As of September 30, 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 and nine months ended September 30, 2023 and 2022 (dollars in thousands): Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 500 $ 813 $ 940 $ 1,799 $ 2,739 Short-term lease cost 107 161 268 321 297 618 Total lease cost $ 420 $ 661 $ 1,081 $ 1,261 $ 2,096 $ 3,357 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 542 $ 855 $ 940 $ 1,787 $ 2,727 Weighted-average remaining lease term (in years): Capitalized operating leases 0.17 3.15 3.04 Weighted-average discount rate: Capitalized operating leases 3.92% 4.07% 4.05% Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 693 $ 1,006 $ 940 $ 2,112 $ 3,052 Short-term lease cost 107 58 165 321 100 421 Total lease cost $ 420 $ 751 $ 1,171 $ 1,261 $ 2,212 $ 3,473 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 713 $ 1,026 $ 940 $ 2,147 $ 3,087 Weighted-average remaining lease term (in years): Capitalized operating leases 1.17 4.26 3.78 Weighted-average discount rate: Capitalized operating leases 3.92% 4.03% 4.02% As of September 30, 2023, future lease payments over the remaining term of capitalized operating leases were as follows (in thousands): For the Years Ended December 31, Related Parties Others Total 2023, excluding the nine months ended September 30, 2023 $ 315 $ 373 $ 688 2024 163 1,723 1,886 2025 163 1,650 1,813 2026 163 957 1,120 2027 1 236 237 Thereafter — 161 161 $ 805 $ 5,100 $ 5,905 Imputed interest (355) Lease liability balance at September 30, 2023 $ 5,550 As of September 30, 2023, the ROU asset had a balance of $4,934. The long-term lease liability was $3,638 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $1,912. As of September 30, 2022, the ROU asset had a balance of $8,495. The long-term lease liability was $5,620 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,471. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Segment Information | |
Segment Information | Note 6–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 and nine months ended September 30, 2023 and 2022 is shown below (in thousands): Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Net sales: Business Solutions $ 269,021 $ 315,816 $ 803,162 $ 964,610 Enterprise Solutions 276,566 305,510 877,662 989,861 Public Sector Solutions 147,499 154,366 473,354 438,074 Total net sales $ 693,086 $ 775,692 $ 2,154,178 $ 2,392,545 Operating income (loss): Business Solutions $ 21,040 $ 19,278 $ 56,424 $ 62,230 Enterprise Solutions 11,230 12,401 25,263 42,103 Public Sector Solutions 4,117 4,211 5,796 4,156 Headquarters/Other (4,365) (4,151) (12,273) (11,845) Total operating income 32,022 31,739 75,210 96,644 Other income, net 2,688 308 5,848 319 Income before taxes $ 34,710 $ 32,047 $ 81,058 $ 96,963 Selected operating expense: Depreciation and amortization: Business Solutions $ 156 $ 167 $ 473 $ 502 Enterprise Solutions 391 482 1,238 1,517 Public Sector Solutions 22 20 61 59 Headquarters/Other 2,720 2,351 7,684 6,922 Total depreciation and amortization $ 3,289 $ 3,020 $ 9,456 $ 9,000 Total assets: Business Solutions $ 481,483 $ 451,872 Enterprise Solutions 676,694 647,592 Public Sector Solutions 110,919 113,820 Headquarters/Other (87,669) (79,159) Total assets $ 1,181,427 $ 1,134,125 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 September 30, 2023 and 2022, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $58,864 and $62,154 , 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 | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7–Commitments and Contingencies The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. The outcomes of such matters are 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 | 9 Months Ended |
Sep. 30, 2023 | |
Bank Borrowings | |
Bank Borrowings | Note 8–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 daily Bloomberg Short-Term Bank Yield Index, or BSBY Rate, plus a spread based on the Company’s funded debt ratio, or in the absence of BSBY Rate, the prime rate (8.50% at September 30, 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 September 30, 2023, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility. Cash receipts are automatically applied against any outstanding borrowings. During the nine months ended September 30, 2023, the Company borrowed incremental amounts that were each repaid in full. These borrowings for the nine months ended September 30, 2023 totaled $70,877; however, at no time were the outstanding borrowings greater than the $50,000 limit under the credit facility. The Company had no outstanding borrowings under the credit facility as of September 30, 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) | 9 Months Ended |
Sep. 30, 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 unaudited 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 and nine months ended September 30, 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. |
Investments | Investments At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. All of the Company’s investments are classified as available-for-sale. The Company classifies investments as short-term when their remaining contractual maturities are one year or less from the balance sheet date, and as long-term when the investment has a remaining contractual maturity of more than one year from the balance sheet date. The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. |
Treasury Stock, at Cost | Treasury Stock, at Cost The total repurchases for the nine months ended September 30, 2023 were recorded as treasury stock of $5,446. Such cost reflects the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022. |
Restructuring and other charges | Restructuring and Other Charges The restructuring and other charges recorded for the three and nine months ended September 30, 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 and other liabilities in the consolidated balance sheets as of September 30, 2023. The Company is currently evaluating additional restructuring activities for the fourth quarter of 2023 and beyond. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Employee separations $ 17 $ — $ 2,416 $ — Other charges 27 — 271 — Total restructuring and other charges $ 44 $ — $ 2,687 $ — Included in accrued expenses and other liabilities as of September 30, 2023 was $772 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 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation | |
Schedule of restructuring and other charges | Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Employee separations $ 17 $ — $ 2,416 $ — Other charges 27 — 271 — Total restructuring and other charges $ 44 $ — $ 2,687 $ — |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue | |
Schedule of disaggregation of revenue from contracts with customers | The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended September 30, 2023 and 2022, along with the segment for each category (in thousands). Three Months Ended September 30, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 82,777 $ 91,643 $ 46,898 $ 221,318 Desktops 17,695 32,822 16,281 66,798 Software 34,863 29,158 13,287 77,308 Servers/Storage 25,863 13,153 11,307 50,323 Net/Com Products 38,672 25,699 17,964 82,335 Displays and Sound 24,299 26,175 20,367 70,841 Accessories 26,335 32,501 12,590 71,426 Other Hardware/Services 18,517 25,415 8,805 52,737 Total net sales $ 269,021 $ 276,566 $ 147,499 $ 693,086 Three Months Ended September 30, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 120,689 $ 95,017 $ 60,960 $ 276,666 Desktops 21,151 37,045 13,113 71,309 Software 36,965 36,996 12,186 86,147 Servers/Storage 27,016 15,857 12,213 55,086 Net/Com Products 27,732 19,625 8,189 55,546 Displays and Sound 28,377 30,011 20,633 79,021 Accessories 33,007 46,051 17,808 96,866 Other Hardware/Services 20,879 24,908 9,264 55,051 Total net sales $ 315,816 $ 305,510 $ 154,366 $ 775,692 The following tables represent a disaggregation of revenue from arrangements with customers for the nine months ended September 30, 2023 and 2022, along with the segment for each category (in thousands). Nine Months Ended September 30, 2023 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 265,777 $ 293,551 $ 172,903 $ 732,231 Desktops 55,468 96,536 48,669 200,673 Software 103,267 85,953 36,263 225,483 Servers/Storage 72,759 44,365 33,253 150,377 Net/Com Products 95,560 74,958 53,517 224,035 Displays and Sound 70,766 80,217 50,354 201,337 Accessories 81,576 121,190 42,551 245,317 Other Hardware/Services 57,989 80,892 35,844 174,725 Total net sales $ 803,162 $ 877,662 $ 473,354 $ 2,154,178 Nine Months Ended September 30, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 374,298 $ 333,764 $ 185,021 $ 893,083 Desktops 68,459 134,541 44,368 247,368 Software 111,440 79,578 27,963 218,981 Servers/Storage 78,878 43,085 31,441 153,404 Net/Com Products 74,789 66,060 22,856 163,705 Displays and Sound 92,170 104,822 53,263 250,255 Accessories 100,904 151,786 46,423 299,113 Other Hardware/Services 63,672 76,225 26,739 166,636 Total net sales $ 964,610 $ 989,861 $ 438,074 $ 2,392,545 |
Schedule of changes in contract liability balances | The following table provides information about contract liabilities from arrangements with customers as of September 30, 2023 and December 31, 2022 (in thousands). September 30, 2023 December 31, 2022 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 3,826 $ 4,266 Changes in the contract liability balances during the nine months ended September 30, 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 15,207 Amounts recognized as revenue as performance obligations satisfied (15,647) Balance at September 30, 2023 $ 3,826 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 18,943 Amounts recognized as revenue as performance obligations satisfied (22,544) Balance at September 30, 2022 $ 5,027 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Schedule of available-for-sale investments within cash equivalents and short-term investments | Cash equivalents and short-term investments consist of the following (in thousands): September 30, 2023 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and cash equivalents: Money market funds $ 167,852 $ — $ — $ 167,852 U.S. Government treasury securities 49,368 — — 49,368 Short-term investments: U.S. Government treasury securities 48,699 195 — 48,894 Total $ 265,919 $ 195 $ — $ 266,114 December 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash and cash equivalents: Money market funds $ 96,386 $ — $ — $ 96,386 Total $ 96,386 $ — $ — $ 96,386 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income $ 25,598 $ 23,206 $ 59,493 $ 70,396 Denominator: Denominator for basic earnings per share 26,262 26,279 26,281 26,267 Dilutive effect of employee stock awards 172 176 125 165 Denominator for diluted earnings per share 26,434 26,455 26,406 26,432 Earnings per share: Basic $ 0.97 $ 0.88 $ 2.26 $ 2.68 Diluted $ 0.97 $ 0.88 $ 2.25 $ 2.66 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Schedule of lease cost | As of September 30, 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 and nine months ended September 30, 2023 and 2022 (dollars in thousands): Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 500 $ 813 $ 940 $ 1,799 $ 2,739 Short-term lease cost 107 161 268 321 297 618 Total lease cost $ 420 $ 661 $ 1,081 $ 1,261 $ 2,096 $ 3,357 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 542 $ 855 $ 940 $ 1,787 $ 2,727 Weighted-average remaining lease term (in years): Capitalized operating leases 0.17 3.15 3.04 Weighted-average discount rate: Capitalized operating leases 3.92% 4.07% 4.05% Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 313 $ 693 $ 1,006 $ 940 $ 2,112 $ 3,052 Short-term lease cost 107 58 165 321 100 421 Total lease cost $ 420 $ 751 $ 1,171 $ 1,261 $ 2,212 $ 3,473 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 313 $ 713 $ 1,026 $ 940 $ 2,147 $ 3,087 Weighted-average remaining lease term (in years): Capitalized operating leases 1.17 4.26 3.78 Weighted-average discount rate: Capitalized operating leases 3.92% 4.03% 4.02% |
Schedule of future lease payments on capitalized operating leases | As of September 30, 2023, future lease payments over the remaining term of capitalized operating leases were as follows (in thousands): For the Years Ended December 31, Related Parties Others Total 2023, excluding the nine months ended September 30, 2023 $ 315 $ 373 $ 688 2024 163 1,723 1,886 2025 163 1,650 1,813 2026 163 957 1,120 2027 1 236 237 Thereafter — 161 161 $ 805 $ 5,100 $ 5,905 Imputed interest (355) Lease liability balance at September 30, 2023 $ 5,550 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Information | |
Segment information applicable to reportable operating segments | Net sales presented below exclude inter-segment product revenues. Segment information applicable to the Company’s operating segments for the three and nine months ended September 30, 2023 and 2022 is shown below (in thousands): Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2023 2022 2023 2022 Net sales: Business Solutions $ 269,021 $ 315,816 $ 803,162 $ 964,610 Enterprise Solutions 276,566 305,510 877,662 989,861 Public Sector Solutions 147,499 154,366 473,354 438,074 Total net sales $ 693,086 $ 775,692 $ 2,154,178 $ 2,392,545 Operating income (loss): Business Solutions $ 21,040 $ 19,278 $ 56,424 $ 62,230 Enterprise Solutions 11,230 12,401 25,263 42,103 Public Sector Solutions 4,117 4,211 5,796 4,156 Headquarters/Other (4,365) (4,151) (12,273) (11,845) Total operating income 32,022 31,739 75,210 96,644 Other income, net 2,688 308 5,848 319 Income before taxes $ 34,710 $ 32,047 $ 81,058 $ 96,963 Selected operating expense: Depreciation and amortization: Business Solutions $ 156 $ 167 $ 473 $ 502 Enterprise Solutions 391 482 1,238 1,517 Public Sector Solutions 22 20 61 59 Headquarters/Other 2,720 2,351 7,684 6,922 Total depreciation and amortization $ 3,289 $ 3,020 $ 9,456 $ 9,000 Total assets: Business Solutions $ 481,483 $ 451,872 Enterprise Solutions 676,694 647,592 Public Sector Solutions 110,919 113,820 Headquarters/Other (87,669) (79,159) Total assets $ 1,181,427 $ 1,134,125 |
BASIS OF PRESENTATION - Restruc
BASIS OF PRESENTATION - Restructuring and Other Charges (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Restructuring and other charges | ||
Restructuring and other charges | $ 44 | $ 2,687 |
Accrued employee termination benefits | 772 | 772 |
Treasury stock | ||
Common stock repurchases as treasury stock including excise tax | $ 5,446 | |
Excise tax rate on certain stock repurchases | 1% | |
Employee separations | ||
Restructuring and other charges | ||
Restructuring and other charges | 17 | $ 2,416 |
Other charges | ||
Restructuring and other charges | ||
Restructuring and other charges | $ 27 | $ 271 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of revenue | ||||
Net sales | $ 693,086 | $ 775,692 | $ 2,154,178 | $ 2,392,545 |
Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 221,318 | 276,666 | 732,231 | 893,083 |
Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 66,798 | 71,309 | 200,673 | 247,368 |
Software | ||||
Disaggregation of revenue | ||||
Net sales | 77,308 | 86,147 | 225,483 | 218,981 |
Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 50,323 | 55,086 | 150,377 | 153,404 |
Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 82,335 | 55,546 | 224,035 | 163,705 |
Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 70,841 | 79,021 | 201,337 | 250,255 |
Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 71,426 | 96,866 | 245,317 | 299,113 |
Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 52,737 | 55,051 | 174,725 | 166,636 |
Business Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 269,021 | 315,816 | 803,162 | 964,610 |
Business Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 82,777 | 120,689 | 265,777 | 374,298 |
Business Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 17,695 | 21,151 | 55,468 | 68,459 |
Business Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 34,863 | 36,965 | 103,267 | 111,440 |
Business Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 25,863 | 27,016 | 72,759 | 78,878 |
Business Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 38,672 | 27,732 | 95,560 | 74,789 |
Business Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 24,299 | 28,377 | 70,766 | 92,170 |
Business Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 26,335 | 33,007 | 81,576 | 100,904 |
Business Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 18,517 | 20,879 | 57,989 | 63,672 |
Enterprise Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 276,566 | 305,510 | 877,662 | 989,861 |
Enterprise Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 91,643 | 95,017 | 293,551 | 333,764 |
Enterprise Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 32,822 | 37,045 | 96,536 | 134,541 |
Enterprise Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 29,158 | 36,996 | 85,953 | 79,578 |
Enterprise Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 13,153 | 15,857 | 44,365 | 43,085 |
Enterprise Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 25,699 | 19,625 | 74,958 | 66,060 |
Enterprise Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 26,175 | 30,011 | 80,217 | 104,822 |
Enterprise Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 32,501 | 46,051 | 121,190 | 151,786 |
Enterprise Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 25,415 | 24,908 | 80,892 | 76,225 |
Public Sector Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 147,499 | 154,366 | 473,354 | 438,074 |
Public Sector Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 46,898 | 60,960 | 172,903 | 185,021 |
Public Sector Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 16,281 | 13,113 | 48,669 | 44,368 |
Public Sector Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 13,287 | 12,186 | 36,263 | 27,963 |
Public Sector Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 11,307 | 12,213 | 33,253 | 31,441 |
Public Sector Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 17,964 | 8,189 | 53,517 | 22,856 |
Public Sector Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 20,367 | 20,633 | 50,354 | 53,263 |
Public Sector Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 12,590 | 17,808 | 42,551 | 46,423 |
Public Sector Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | $ 8,805 | $ 9,264 | $ 35,844 | $ 26,739 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 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 | 15,207 | 18,943 | |
Amounts recognized as revenue as performance obligations satisfied | (15,647) | (22,544) | |
Ending balance - Contract liability | 3,826 | $ 5,027 | |
Accrued expenses and other liabilities | |||
Contract liabilities | |||
Contract liabilities | $ 3,826 | $ 4,266 |
FAIR VALUE MEASUREMENTS - Avail
FAIR VALUE MEASUREMENTS - Available-for-Sale Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | $ 265,919 | $ 96,386 |
Unrealized Gains | 195 | |
Fair Value | $ 266,114 | $ 96,386 |
Fair value hierarchy - Level 1 | us-gaap:FairValueInputsLevel1Member | us-gaap:FairValueInputsLevel1Member |
Money market funds | Cash and cash equivalents | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | $ 167,852 | $ 96,386 |
Fair Value | 167,852 | $ 96,386 |
U.S. Government treasury securities | Cash and cash equivalents | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | 49,368 | |
Fair Value | 49,368 | |
U.S. Government treasury securities | Short-term investments | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | 48,699 | |
Unrealized Gains | 195 | |
Fair Value | $ 48,894 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||
Net Income (Loss) | $ 25,598 | $ 23,206 | $ 59,493 | $ 70,396 |
Denominator: | ||||
Denominator for basic earnings per share | 26,262 | 26,279 | 26,281 | 26,267 |
Dilutive effect of unvested employee stock awards | 172 | 176 | 125 | 165 |
Denominator for diluted earnings per share | 26,434 | 26,455 | 26,406 | 26,432 |
Earnings per share: | ||||
Basic | $ 0.97 | $ 0.88 | $ 2.26 | $ 2.68 |
Diluted | $ 0.97 | $ 0.88 | $ 2.25 | $ 2.66 |
Additional Disclosure | ||||
Employee stock awards excluded from computation of diluted earnings per share | 0 | 0 | 0 | 0 |
LEASES - Lease Cost and Other I
LEASES - Lease Cost and Other Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) lease | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Leases | |||||
Right-of-use assets | $ 4,934 | $ 8,495 | $ 4,934 | $ 8,495 | $ 7,558 |
Lease liability | 5,550 | $ 5,550 | |||
Number of additional operating or financing leases not yet commenced | lease | 0 | ||||
Lease Cost | |||||
Capitalized operating lease cost | 813 | 1,006 | $ 2,739 | 3,052 | |
Short-term lease cost | 268 | 165 | 618 | 421 | |
Total lease cost | 1,081 | 1,171 | 3,357 | 3,473 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 855 | $ 1,026 | $ 2,727 | $ 3,087 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 14 days | 3 years 9 months 10 days | 3 years 14 days | 3 years 9 months 10 days | |
Weighted-average discount rate - Capitalized operating leases | 4.05% | 4.02% | 4.05% | 4.02% | |
Related Parties | |||||
Leases | |||||
Right-of-use assets | $ 209 | $ 209 | |||
Lease liability | 209 | 209 | |||
Lease Cost | |||||
Capitalized operating lease cost | 313 | $ 313 | 940 | $ 940 | |
Short-term lease cost | 107 | 107 | 321 | 321 | |
Total lease cost | 420 | 420 | 1,261 | 1,261 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 313 | $ 313 | $ 940 | $ 940 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 2 months 1 day | 1 year 2 months 1 day | 2 months 1 day | 1 year 2 months 1 day | |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% | 3.92% | 3.92% | |
Others | |||||
Lease Cost | |||||
Capitalized operating lease cost | $ 500 | $ 693 | $ 1,799 | $ 2,112 | |
Short-term lease cost | 161 | 58 | 297 | 100 | |
Total lease cost | 661 | 751 | 2,096 | 2,212 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 542 | $ 713 | $ 1,787 | $ 2,147 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 1 month 24 days | 4 years 3 months 3 days | 3 years 1 month 24 days | 4 years 3 months 3 days | |
Weighted-average discount rate - Capitalized operating leases | 4.07% | 4.03% | 4.07% | 4.03% |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Future lease payments over the remaining term of capitalized operating leases | |||
2023, excluding the nine months ended September 30, 2023 | $ 688 | ||
2024 | 1,886 | ||
2025 | 1,813 | ||
2026 | 1,120 | ||
2027 | 237 | ||
Thereafter | 161 | ||
Total | 5,905 | ||
Imputed interest | (355) | ||
Lease liability balance | 5,550 | ||
Right-of-use assets | 4,934 | $ 7,558 | $ 8,495 |
Long-term lease liability | 3,638 | $ 4,994 | 5,620 |
Short-term lease liability | $ 1,912 | $ 3,471 | |
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 nine months ended September 30, 2023 | $ 315 | ||
2024 | 163 | ||
2025 | 163 | ||
2026 | 163 | ||
2027 | 1 | ||
Total | 805 | ||
Lease liability balance | 209 | ||
Right-of-use assets | 209 | ||
Others | |||
Future lease payments over the remaining term of capitalized operating leases | |||
2023, excluding the nine months ended September 30, 2023 | 373 | ||
2024 | 1,723 | ||
2025 | 1,650 | ||
2026 | 957 | ||
2027 | 236 | ||
Thereafter | 161 | ||
Total | $ 5,100 |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) segment | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) segment | Dec. 31, 2022 USD ($) | |
Segment Reporting Information | |||||
Number of reportable segments | segment | 3 | 3 | 3 | 3 | |
Number of operating segments | segment | 3 | 3 | 3 | 3 | |
Net sales: | |||||
Net sales | $ 693,086 | $ 775,692 | $ 2,154,178 | $ 2,392,545 | |
Operating income (loss): | |||||
Operating income (loss) | 32,022 | 31,739 | 75,210 | 96,644 | |
Other expenses, net | 2,688 | 308 | 5,848 | 319 | |
Income before taxes | 34,710 | 32,047 | 81,058 | 96,963 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 3,289 | 3,020 | 9,456 | 9,000 | |
Total assets: | |||||
Total assets | 1,181,427 | 1,134,125 | 1,181,427 | 1,134,125 | $ 1,099,826 |
Business Solutions | |||||
Net sales: | |||||
Net sales | 269,021 | 315,816 | 803,162 | 964,610 | |
Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 276,566 | 305,510 | 877,662 | 989,861 | |
Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 147,499 | 154,366 | 473,354 | 438,074 | |
Operating Segments | Business Solutions | |||||
Net sales: | |||||
Net sales | 269,021 | 315,816 | 803,162 | 964,610 | |
Operating income (loss): | |||||
Operating income (loss) | 21,040 | 19,278 | 56,424 | 62,230 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 156 | 167 | 473 | 502 | |
Total assets: | |||||
Total assets | 481,483 | 451,872 | 481,483 | 451,872 | |
Operating Segments | Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 276,566 | 305,510 | 877,662 | 989,861 | |
Operating income (loss): | |||||
Operating income (loss) | 11,230 | 12,401 | 25,263 | 42,103 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 391 | 482 | 1,238 | 1,517 | |
Total assets: | |||||
Total assets | 676,694 | 647,592 | 676,694 | 647,592 | |
Operating Segments | Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 147,499 | 154,366 | 473,354 | 438,074 | |
Operating income (loss): | |||||
Operating income (loss) | 4,117 | 4,211 | 5,796 | 4,156 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 22 | 20 | 61 | 59 | |
Total assets: | |||||
Total assets | 110,919 | 113,820 | 110,919 | 113,820 | |
Headquarters/Other | |||||
Operating income (loss): | |||||
Operating income (loss) | (4,365) | (4,151) | (12,273) | (11,845) | |
Depreciation and amortization: | |||||
Depreciation and amortization | 2,720 | 2,351 | 7,684 | 6,922 | |
Total assets: | |||||
Assets net of intercompany balance eliminations | (87,669) | (79,159) | (87,669) | (79,159) | |
Intersegment Elimination | |||||
Total assets: | |||||
Total assets | $ (58,864) | $ (62,154) | $ (58,864) | $ (62,154) |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 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 | 70,877 | $ 36,463 |
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 | 8.50% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 25,598 | $ 23,206 | $ 59,493 | $ 70,396 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |