Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2024 | Jul. 24, 2024 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2024 | |
Securities Act 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, $0.01 par value | |
Trading Symbol | CNXN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,293,202 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001050377 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Current Assets: | ||
Cash and cash equivalents | $ 128,213 | $ 144,954 |
Short-term investments | 257,590 | 152,232 |
Accounts receivable, net | 598,826 | 606,834 |
Inventories, net | 136,613 | 124,179 |
Income taxes receivable | 9,281 | 4,348 |
Prepaid expenses and other current assets | 16,982 | 16,092 |
Total current assets | 1,147,505 | 1,048,639 |
Property and equipment, net | 54,376 | 56,658 |
Right-of-use assets | 3,917 | 4,340 |
Goodwill | 73,602 | 73,602 |
Intangible, net | 2,819 | 3,428 |
Other assets | 1,266 | 1,714 |
Total Assets | 1,283,485 | 1,188,381 |
Current Liabilities: | ||
Accounts payable | 317,111 | 263,682 |
Accrued payroll | 23,004 | 20,440 |
Accrued expenses and other liabilities | 48,527 | 43,843 |
Total current liabilities | 388,642 | 327,965 |
Deferred income taxes | 17,418 | 15,844 |
Noncurrent operating lease liabilities | 2,497 | 3,181 |
Other liabilities | 624 | |
Total Liabilities | 408,557 | 347,614 |
Stockholders' Equity: | ||
Common stock | 293 | 293 |
Additional paid-in capital | 134,967 | 130,878 |
Retained earnings | 794,942 | 760,898 |
Accumulated other comprehensive (loss) income | (103) | 81 |
Treasury stock, at cost | (55,171) | (51,383) |
Total Stockholders' Equity | 874,928 | 840,767 |
Total Liabilities and Stockholders' Equity | $ 1,283,485 | $ 1,188,381 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Statement [Abstract] | ||||
Net sales | $ 736,479 | $ 733,547 | $ 1,368,504 | $ 1,461,092 |
Cost of sales | 599,937 | 605,770 | 1,113,890 | 1,211,019 |
Gross profit | 136,542 | 127,777 | 254,614 | 250,073 |
Selling, general and administrative expenses | 105,208 | 100,960 | 209,816 | 204,242 |
Restructuring and other charges | 415 | 1,746 | 415 | 2,643 |
Income from operations | 30,919 | 25,071 | 44,383 | 43,188 |
Interest income, net | 4,649 | 1,874 | 9,216 | 3,160 |
Income before taxes | 35,568 | 26,945 | 53,599 | 46,348 |
Income tax provision | (9,407) | (7,248) | (14,284) | (12,453) |
Net income | $ 26,161 | $ 19,697 | $ 39,315 | $ 33,895 |
Earnings per common share: | ||||
Basic | $ 0.99 | $ 0.75 | $ 1.49 | $ 1.29 |
Diluted | $ 0.99 | $ 0.75 | $ 1.48 | $ 1.28 |
Shares used in computation of earnings per common share: | ||||
Basic | 26,348 | 26,256 | 26,355 | 26,291 |
Diluted | 26,520 | 26,365 | 26,522 | 26,400 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Condensed Consolidated Statements Of Other Comprehensive Income | ||||
Net Income (Loss) | $ 26,161 | $ 19,697 | $ 39,315 | $ 33,895 |
Other comprehensive loss: | ||||
Unrealized losses on available-for-sale investments, net of tax of $11 and $49 for the three and six months ended June 30, 2024, respectively, and net of tax of $0 for the three and six months ended June 30, 2023, respectively | (41) | (184) | ||
Comprehensive income | $ 26,120 | $ 19,697 | $ 39,131 | $ 33,895 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Condensed Consolidated Statements Of Other Comprehensive Income | ||||
Unrealized losses on available-for-sale investments, tax | $ 11 | $ 0 | $ 49 | $ 0 |
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 (Loss) Income | Treasury Shares | Total |
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 | 3,636 | 3,636 | ||||
Restricted stock units vested (in shares) | 22 | |||||
Shares withheld for taxes paid on stock awards | (471) | (471) | ||||
Repurchase of common stock for treasury | $ (5,446) | (5,446) | ||||
Repurchase of common stock for treasury (in shares) | (129) | |||||
Dividend declaration | (4,206) | (4,206) | ||||
Net Income (Loss) | 33,895 | 33,895 | ||||
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) | |||||
Balance at Mar. 31, 2023 | $ 291 | 127,424 | 698,128 | $ (49,360) | 776,483 | |
Balance (in shares) at Mar. 31, 2023 | 29,133 | |||||
Balance - Treasury Shares (in shares) at Mar. 31, 2023 | (2,852) | |||||
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 | 1,783 | 1,783 | ||||
Restricted stock units vested (in shares) | 12 | |||||
Shares withheld for taxes paid on stock awards | (258) | (258) | ||||
Repurchase of common stock for treasury | $ (2,023) | (2,023) | ||||
Repurchase of common stock for treasury (in shares) | (50) | |||||
Dividend declaration | (2,099) | (2,099) | ||||
Net Income (Loss) | 19,697 | 19,697 | ||||
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) | |||||
Balance at Dec. 31, 2023 | $ 293 | 130,878 | 760,898 | $ 81 | $ (51,383) | 840,767 |
Balance (in shares) at Dec. 31, 2023 | 29,262 | |||||
Balance - Treasury Shares (in shares) at Dec. 31, 2023 | (2,902) | |||||
Issuance of common stock under Employee Stock Purchase Plan | 537 | 537 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 9 | |||||
Stock-based compensation expense | 4,197 | 4,197 | ||||
Restricted stock units vested (in shares) | 23 | |||||
Shares withheld for taxes paid on stock awards | (645) | (645) | ||||
Repurchase of common stock for treasury | $ (3,788) | (3,788) | ||||
Repurchase of common stock for treasury (in shares) | (60) | |||||
Dividend declaration | (5,271) | (5,271) | ||||
Net Income (Loss) | 39,315 | 39,315 | ||||
Other comprehensive income, net of tax | (184) | (184) | ||||
Balance at Jun. 30, 2024 | $ 293 | 134,967 | 794,942 | (103) | $ (55,171) | 874,928 |
Balance (in shares) at Jun. 30, 2024 | 29,294 | |||||
Balance - Treasury Shares (in shares) at Jun. 30, 2024 | (2,962) | |||||
Balance at Mar. 31, 2024 | $ 293 | 132,596 | 771,416 | (62) | $ (51,571) | 852,672 |
Balance (in shares) at Mar. 31, 2024 | 29,271 | |||||
Balance - Treasury Shares (in shares) at Mar. 31, 2024 | (2,905) | |||||
Issuance of common stock under Employee Stock Purchase Plan | 537 | 537 | ||||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 9 | |||||
Stock-based compensation expense | 2,248 | 2,248 | ||||
Restricted stock units vested (in shares) | 14 | |||||
Shares withheld for taxes paid on stock awards | (414) | (414) | ||||
Repurchase of common stock for treasury | $ (3,600) | (3,600) | ||||
Repurchase of common stock for treasury (in shares) | (57) | |||||
Dividend declaration | (2,635) | (2,635) | ||||
Net Income (Loss) | 26,161 | 26,161 | ||||
Other comprehensive income, net of tax | (41) | (41) | ||||
Balance at Jun. 30, 2024 | $ 293 | $ 134,967 | $ 794,942 | $ (103) | $ (55,171) | $ 874,928 |
Balance (in shares) at Jun. 30, 2024 | 29,294 | |||||
Balance - Treasury Shares (in shares) at Jun. 30, 2024 | (2,962) |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Condensed Consolidated Statement of Changes in Stockholders' Equity | ||||
Dividend per Share | $ 0.10 | $ 0.08 | $ 0.10 | $ 0.08 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash Flows provided by Operating Activities: | ||
Net income | $ 39,315 | $ 33,895 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,539 | 6,167 |
Adjustments to credit losses reserve | 410 | 1,247 |
Stock-based compensation expense | 4,197 | 3,636 |
Deferred income taxes | 1,623 | |
Amortization of discount on short-term investments | (5,593) | |
Loss on disposal of fixed assets | 36 | 475 |
Changes in assets and liabilities: | ||
Accounts receivable | 7,598 | 16,370 |
Inventories | (12,434) | 48,948 |
Prepaid expenses, income tax receivable, and other current assets | (5,823) | (13,653) |
Other non-current assets | 448 | 140 |
Accounts payable | 53,172 | 44,584 |
Accrued expenses and other liabilities | 6,188 | (6,364) |
Net cash provided by operating activities | 95,676 | 135,445 |
Cash Flows used in Investing Activities: | ||
Purchases of short-term investments | (203,278) | |
Maturities of short-term investments | 103,280 | |
Purchases of property and equipment | (3,427) | (4,860) |
Net cash used in investing activities | (103,425) | (4,860) |
Cash Flows used in Financing Activities: | ||
Proceeds from short-term borrowings | 10,560 | 67,895 |
Repayment of short-term borrowings | (10,560) | (67,895) |
Purchase of common stock for treasury shares | (3,613) | (5,392) |
Dividend payments | (5,271) | (4,206) |
Issuance of stock under Employee Stock Purchase Plan | 537 | 537 |
Payments of payroll taxes on stock-based compensation through shares withheld | (645) | (471) |
Net cash used in financing activities | (8,992) | (9,532) |
(Decrease) increase in cash and cash equivalents | (16,741) | 121,053 |
Cash and cash equivalents, beginning of year | 144,954 | 122,930 |
Cash and cash equivalents, end of period | 128,213 | 243,983 |
Non-cash Investing and Financing Activities: | ||
Accrued purchases of property and equipment | 347 | 205 |
Accrued purchase of common stock for treasury shares | 211 | |
Accrued excise tax on treasury purchases | 18 | 54 |
Supplemental Cash Flow Information: | ||
Income taxes paid | 17,946 | 27,410 |
Interest paid | $ 2 | $ 18 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2024 | |
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, 2023, 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, 2023. 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 six months ended June 30, 2024 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2024. 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 and Investments 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. 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 (loss) income on the condensed consolidated balance sheets. Included in interest income, net on the condensed consolidated statements of income is interest income on cash equivalents and short-term investments of $4,655 and $9,220 for the three and six months ended June 30, 2024, respectively, and $1,874 and $3,182 for the three and six months ended June 30, 2023, respectively. Treasury Stock, at Cost The total repurchases for the six months ended June 30, 2024 and 2023 were recorded as treasury stock of $3,788 and $5,446, respectively. Such costs reflect 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 six months ended June 30, 2024 and 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 June 30, 2024. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Employee separations $ 415 $ 1,701 $ 415 $ 2,399 Other charges — 45 — 244 Total restructuring and other charges $ 415 $ 1,746 $ 415 $ 2,643 Included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2024 was $130 related to unpaid termination benefits. Recently Issued Financial Accounting Standards In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2024 | |
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 June 30, 2024 and 2023, along with the segment for each category (in thousands). Three Months Ended June 30, 2024 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 89,802 $ 97,841 $ 69,816 $ 257,459 Desktops 52,680 20,105 12,792 85,577 Software 21,628 37,775 9,571 68,974 Servers/Storage 15,691 34,056 13,640 63,387 Net/Com Products 19,107 19,845 14,312 53,264 Displays and Sound 37,265 19,981 16,745 73,991 Accessories 38,645 28,663 11,470 78,778 Other Hardware/Services 23,990 19,932 11,127 55,049 Total net sales $ 298,808 $ 278,198 $ 159,473 $ 736,479 Three Months Ended June 30, 2023 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 87,590 $ 88,081 $ 74,231 $ 249,902 Desktops 33,572 19,011 17,971 70,554 Software 17,561 33,828 13,059 64,448 Servers/Storage 18,705 22,605 11,959 53,269 Net/Com Products 28,727 28,584 22,233 79,544 Displays and Sound 27,322 23,654 16,785 67,761 Accessories 41,095 26,506 16,488 84,089 Other Hardware/Services 32,581 18,758 12,641 63,980 Total net sales $ 287,153 $ 261,027 $ 185,367 $ 733,547 The following tables represent a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2024 and 2023, along with the segment for each category (in thousands). Six Months Ended June 30, 2024 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 180,033 $ 189,997 $ 108,698 $ 478,728 Desktops 90,717 38,223 21,539 150,479 Software 48,748 68,427 15,121 132,296 Servers/Storage 28,058 55,667 22,146 105,871 Net/Com Products 39,069 41,690 19,917 100,676 Displays and Sound 68,529 41,733 27,348 137,610 Accessories 80,177 59,036 19,066 158,279 Other Hardware/Services 46,136 39,294 19,135 104,565 Total net sales $ 581,467 $ 534,067 $ 252,970 $ 1,368,504 Six Months Ended June 30, 2023 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 201,908 $ 183,000 $ 126,005 $ 510,913 Desktops 63,714 37,773 32,388 133,875 Software 56,795 68,404 22,976 148,175 Servers/Storage 31,212 46,896 21,946 100,054 Net/Com Products 49,259 56,888 35,553 141,700 Displays and Sound 54,042 46,467 29,987 130,496 Accessories 88,689 55,241 29,961 173,891 Other Hardware/Services 55,477 39,472 27,039 121,988 Total net sales $ 601,096 $ 534,141 $ 325,855 $ 1,461,092 Contract Balances The following table provides information about contract liabilities from arrangements with customers as of June 30, 2024 and December 31, 2023 (in thousands). June 30, 2024 December 31, 2023 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 7,100 $ 4,206 Changes in the contract liability balances during the six months ended June 30, 2024 and 2023 are as follows (in thousands): 2024 Balance at December 31, 2023 $ 4,206 Cash received in advance and not recognized as revenue 9,769 Amounts recognized as revenue as performance obligations satisfied (6,875) Balance at June 30, 2024 $ 7,100 2023 Balance at December 31, 2022 $ 4,266 Cash received in advance and not recognized as revenue 11,980 Amounts recognized as revenue as performance obligations satisfied (9,683) Balance at June 30, 2023 $ 6,563 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3–Fair Value Measurements Cash equivalents and short-term investments consist of the following (in thousands): June 30, 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 108,117 $ — $ — $ 108,117 Short-term investments: U.S. Government treasury securities 257,720 11 (141) 257,590 Total $ 365,837 $ 11 $ (141) $ 365,707 December 31, 2023 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 129,123 $ — $ — $ 129,123 Short-term investments: U.S. Government treasury securities 152,129 103 — 152,232 Total $ 281,252 $ 103 $ — $ 281,355 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 on 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 June 30, 2024 and December 31, 2023, the fair value of the Company’s investments were all measured using level 1 inputs. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net income $ 26,161 $ 19,697 $ 39,315 $ 33,895 Denominator: Denominator for basic earnings per share 26,348 26,256 26,355 26,291 Dilutive effect of employee stock awards 172 109 167 109 Denominator for diluted earnings per share 26,520 26,365 26,522 26,400 Earnings per share: Basic $ 0.99 $ 0.75 $ 1.49 $ 1.29 Diluted $ 0.99 $ 0.75 $ 1.48 $ 1.28 For the three and six months ended June 30, 2024 and 2023, 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 | 6 Months Ended |
Jun. 30, 2024 | |
Lessee Disclosure [Abstract] | |
Leases | Note 5 – Leases The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership. As of June 30, 2024, 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 six months ended June 30, 2024 and 2023 (dollars in thousands): Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ — $ 485 $ 485 $ — $ 944 $ 944 Short-term lease cost 421 140 561 841 281 1,122 Total lease cost $ 421 $ 625 $ 1,046 $ 841 $ 1,225 $ 2,066 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ — $ 532 $ 532 $ — $ 977 $ 977 Weighted-average remaining lease term (in years): Capitalized operating leases — 2.43 2.43 Weighted-average discount rate: Capitalized operating leases 3.92% 4.28% 4.21% Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 314 $ 590 $ 904 $ 627 $ 1,299 $ 1,926 Short-term lease cost 107 115 222 214 136 350 Total lease cost $ 421 $ 705 $ 1,126 $ 841 $ 1,435 $ 2,276 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 314 $ 602 $ 916 $ 627 $ 1,245 $ 1,872 Weighted-average remaining lease term (in years): Capitalized operating leases 0.42 3.59 3.33 Weighted-average discount rate: Capitalized operating leases 3.92% 4.06% 4.04% As of June 30, 2024, 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 2024, excluding the six months ended June 30, 2024 $ 713 $ 394 $ 1,107 2025 163 1,817 1,980 2026 163 1,042 1,205 2027 1 236 237 2028 — 161 161 Thereafter — — — $ 1,040 $ 3,650 $ 4,690 Imputed interest (231) Lease liability balance at June 30, 2024 $ 4,459 As of June 30, 2024, the right-of-use, or ROU, asset had a balance of $3,917. The long-term lease liability was $2,497 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $1,962. As of December 31, 2023, the ROU asset had a balance of $4,340. The long-term lease liability was $3,181 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $1,733. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2024 | |
Segment Information | |
Segment and Related Disclosures | 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 Enterprise Solutions segment, which serves primarily medium-to-large corporations; the Business Solutions segment, which serves primarily small- to medium-sized businesses; 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 six months ended June 30, 2024 and 2023 is shown below (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2024 2023 2024 2023 Net sales: Enterprise Solutions $ 298,808 $ 287,153 $ 581,467 $ 601,096 Business Solutions 278,198 261,027 534,067 534,141 Public Sector Solutions 159,473 185,367 252,970 325,855 Total net sales $ 736,479 $ 733,547 $ 1,368,504 $ 1,461,092 Operating income (loss): Enterprise Solutions $ 10,230 $ 7,511 $ 16,077 $ 14,033 Business Solutions 22,229 18,831 38,018 35,384 Public Sector Solutions 2,714 1,650 (2,636) 1,679 Headquarters/Other (4,254) (2,921) (7,076) (7,908) Total operating income 30,919 25,071 44,383 43,188 Interest income, net 4,649 1,874 9,216 3,160 Income before taxes $ 35,568 $ 26,945 $ 53,599 $ 46,348 Selected operating expense: Depreciation and amortization: Enterprise Solutions $ 221 $ 423 $ 426 $ 847 Business Solutions 147 158 310 317 Public Sector Solutions 23 20 46 39 Headquarters/Other 2,882 2,493 5,757 4,964 Total depreciation and amortization $ 3,273 $ 3,094 $ 6,539 $ 6,167 Total assets: Enterprise Solutions $ 729,450 $ 678,104 Business Solutions 537,655 472,566 Public Sector Solutions 107,382 102,652 Headquarters/Other (91,002) (89,047) Total assets $ 1,283,485 $ 1,164,275 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, short-term investments, inventories, property and equipment, ROU assets, and intercompany balance, net. As of June 30, 2024 and 2023, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $59,751 and $55,432 , 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. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2024 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | Note 7–Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss), which is included as a component of stockholders’ equity, is comprised of unrealized gains (losses) on short-term investments, net of tax. The changes in accumulated other comprehensive income (loss) were as follows (in thousands): Six Months Ended June 30, 2024 Balance - December 31, 2023 $ 81 Other comprehensive income (loss) before reclassifications, net of tax (158) Less amounts reclassified from accumulated other comprehensive income (loss), net of tax 26 Net other comprehensive income (loss) (184) Balance - June 30, 2024 $ (103) Six Months Ended June 30, 2023 Balance - December 31, 2022 $ — Other comprehensive income (loss) before reclassifications, net of tax — Less amounts reclassified from accumulated other comprehensive income (loss), net of tax — Net other comprehensive income (loss) — Balance - June 30, 2023 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 8–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 | 6 Months Ended |
Jun. 30, 2024 | |
Bank Borrowings | |
Bank Borrowings | Note 9–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 Cash receipts are automatically applied against any outstanding borrowings. During the six months ended June 30, 2024 and 2023, the Company borrowed incremental amounts that were each repaid in full. These borrowings for the six months ended June 30, 2024 and 2023 totaled $10,560 and $67,895, respectively; 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 June 30, 2024 or 2023, and accordingly, the entire $50,000 credit facility was available for borrowings on such date. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 26,161 | $ 19,697 | $ 39,315 | $ 33,895 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2024 | |
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 |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Summary of Significant Accounting Policies | |
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, 2023, 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, 2023. 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 six months ended June 30, 2024 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2024. |
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 and Investments | Cash and Cash Equivalents and Investments 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. 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 (loss) income on the condensed consolidated balance sheets. Included in interest income, net on the condensed consolidated statements of income is interest income on cash equivalents and short-term investments of $4,655 and $9,220 for the three and six months ended June 30, 2024, respectively, and $1,874 and $3,182 for the three and six months ended June 30, 2023, respectively. |
Treasury Stock, at Cost | Treasury Stock, at Cost The total repurchases for the six months ended June 30, 2024 and 2023 were recorded as treasury stock of $3,788 and $5,446, respectively. Such costs reflect 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 six months ended June 30, 2024 and 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 June 30, 2024. Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Employee separations $ 415 $ 1,701 $ 415 $ 2,399 Other charges — 45 — 244 Total restructuring and other charges $ 415 $ 1,746 $ 415 $ 2,643 Included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2024 was $130 related to unpaid termination benefits. |
Recently Issued Financial Accounting Standards | Recently Issued Financial Accounting Standards In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Employee separations $ 415 $ 1,701 $ 415 $ 2,399 Other charges — 45 — 244 Total restructuring and other charges $ 415 $ 1,746 $ 415 $ 2,643 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 June 30, 2024 and 2023, along with the segment for each category (in thousands). Three Months Ended June 30, 2024 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 89,802 $ 97,841 $ 69,816 $ 257,459 Desktops 52,680 20,105 12,792 85,577 Software 21,628 37,775 9,571 68,974 Servers/Storage 15,691 34,056 13,640 63,387 Net/Com Products 19,107 19,845 14,312 53,264 Displays and Sound 37,265 19,981 16,745 73,991 Accessories 38,645 28,663 11,470 78,778 Other Hardware/Services 23,990 19,932 11,127 55,049 Total net sales $ 298,808 $ 278,198 $ 159,473 $ 736,479 Three Months Ended June 30, 2023 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 87,590 $ 88,081 $ 74,231 $ 249,902 Desktops 33,572 19,011 17,971 70,554 Software 17,561 33,828 13,059 64,448 Servers/Storage 18,705 22,605 11,959 53,269 Net/Com Products 28,727 28,584 22,233 79,544 Displays and Sound 27,322 23,654 16,785 67,761 Accessories 41,095 26,506 16,488 84,089 Other Hardware/Services 32,581 18,758 12,641 63,980 Total net sales $ 287,153 $ 261,027 $ 185,367 $ 733,547 The following tables represent a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2024 and 2023, along with the segment for each category (in thousands). Six Months Ended June 30, 2024 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 180,033 $ 189,997 $ 108,698 $ 478,728 Desktops 90,717 38,223 21,539 150,479 Software 48,748 68,427 15,121 132,296 Servers/Storage 28,058 55,667 22,146 105,871 Net/Com Products 39,069 41,690 19,917 100,676 Displays and Sound 68,529 41,733 27,348 137,610 Accessories 80,177 59,036 19,066 158,279 Other Hardware/Services 46,136 39,294 19,135 104,565 Total net sales $ 581,467 $ 534,067 $ 252,970 $ 1,368,504 Six Months Ended June 30, 2023 Enterprise Solutions Business Solutions Public Sector Solutions Total Notebooks/Mobility $ 201,908 $ 183,000 $ 126,005 $ 510,913 Desktops 63,714 37,773 32,388 133,875 Software 56,795 68,404 22,976 148,175 Servers/Storage 31,212 46,896 21,946 100,054 Net/Com Products 49,259 56,888 35,553 141,700 Displays and Sound 54,042 46,467 29,987 130,496 Accessories 88,689 55,241 29,961 173,891 Other Hardware/Services 55,477 39,472 27,039 121,988 Total net sales $ 601,096 $ 534,141 $ 325,855 $ 1,461,092 |
Schedule of changes in contract liability balances | The following table provides information about contract liabilities from arrangements with customers as of June 30, 2024 and December 31, 2023 (in thousands). June 30, 2024 December 31, 2023 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 7,100 $ 4,206 Changes in the contract liability balances during the six months ended June 30, 2024 and 2023 are as follows (in thousands): 2024 Balance at December 31, 2023 $ 4,206 Cash received in advance and not recognized as revenue 9,769 Amounts recognized as revenue as performance obligations satisfied (6,875) Balance at June 30, 2024 $ 7,100 2023 Balance at December 31, 2022 $ 4,266 Cash received in advance and not recognized as revenue 11,980 Amounts recognized as revenue as performance obligations satisfied (9,683) Balance at June 30, 2023 $ 6,563 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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): June 30, 2024 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 108,117 $ — $ — $ 108,117 Short-term investments: U.S. Government treasury securities 257,720 11 (141) 257,590 Total $ 365,837 $ 11 $ (141) $ 365,707 December 31, 2023 Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds $ 129,123 $ — $ — $ 129,123 Short-term investments: U.S. Government treasury securities 152,129 103 — 152,232 Total $ 281,252 $ 103 $ — $ 281,355 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net income $ 26,161 $ 19,697 $ 39,315 $ 33,895 Denominator: Denominator for basic earnings per share 26,348 26,256 26,355 26,291 Dilutive effect of employee stock awards 172 109 167 109 Denominator for diluted earnings per share 26,520 26,365 26,522 26,400 Earnings per share: Basic $ 0.99 $ 0.75 $ 1.49 $ 1.29 Diluted $ 0.99 $ 0.75 $ 1.48 $ 1.28 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Lessee Disclosure [Abstract] | |
Schedule of lease cost | As of June 30, 2024, 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 six months ended June 30, 2024 and 2023 (dollars in thousands): Three Months Ended June 30, 2024 Six Months Ended June 30, 2024 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ — $ 485 $ 485 $ — $ 944 $ 944 Short-term lease cost 421 140 561 841 281 1,122 Total lease cost $ 421 $ 625 $ 1,046 $ 841 $ 1,225 $ 2,066 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ — $ 532 $ 532 $ — $ 977 $ 977 Weighted-average remaining lease term (in years): Capitalized operating leases — 2.43 2.43 Weighted-average discount rate: Capitalized operating leases 3.92% 4.28% 4.21% Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 314 $ 590 $ 904 $ 627 $ 1,299 $ 1,926 Short-term lease cost 107 115 222 214 136 350 Total lease cost $ 421 $ 705 $ 1,126 $ 841 $ 1,435 $ 2,276 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 314 $ 602 $ 916 $ 627 $ 1,245 $ 1,872 Weighted-average remaining lease term (in years): Capitalized operating leases 0.42 3.59 3.33 Weighted-average discount rate: Capitalized operating leases 3.92% 4.06% 4.04% |
Schedule of future lease payments on capitalized operating leases | As of June 30, 2024, 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 2024, excluding the six months ended June 30, 2024 $ 713 $ 394 $ 1,107 2025 163 1,817 1,980 2026 163 1,042 1,205 2027 1 236 237 2028 — 161 161 Thereafter — — — $ 1,040 $ 3,650 $ 4,690 Imputed interest (231) Lease liability balance at June 30, 2024 $ 4,459 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 six months ended June 30, 2024 and 2023 is shown below (in thousands): Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2024 2023 2024 2023 Net sales: Enterprise Solutions $ 298,808 $ 287,153 $ 581,467 $ 601,096 Business Solutions 278,198 261,027 534,067 534,141 Public Sector Solutions 159,473 185,367 252,970 325,855 Total net sales $ 736,479 $ 733,547 $ 1,368,504 $ 1,461,092 Operating income (loss): Enterprise Solutions $ 10,230 $ 7,511 $ 16,077 $ 14,033 Business Solutions 22,229 18,831 38,018 35,384 Public Sector Solutions 2,714 1,650 (2,636) 1,679 Headquarters/Other (4,254) (2,921) (7,076) (7,908) Total operating income 30,919 25,071 44,383 43,188 Interest income, net 4,649 1,874 9,216 3,160 Income before taxes $ 35,568 $ 26,945 $ 53,599 $ 46,348 Selected operating expense: Depreciation and amortization: Enterprise Solutions $ 221 $ 423 $ 426 $ 847 Business Solutions 147 158 310 317 Public Sector Solutions 23 20 46 39 Headquarters/Other 2,882 2,493 5,757 4,964 Total depreciation and amortization $ 3,273 $ 3,094 $ 6,539 $ 6,167 Total assets: Enterprise Solutions $ 729,450 $ 678,104 Business Solutions 537,655 472,566 Public Sector Solutions 107,382 102,652 Headquarters/Other (91,002) (89,047) Total assets $ 1,283,485 $ 1,164,275 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated comprehensive income (loss) | Six Months Ended June 30, 2024 Balance - December 31, 2023 $ 81 Other comprehensive income (loss) before reclassifications, net of tax (158) Less amounts reclassified from accumulated other comprehensive income (loss), net of tax 26 Net other comprehensive income (loss) (184) Balance - June 30, 2024 $ (103) Six Months Ended June 30, 2023 Balance - December 31, 2022 $ — Other comprehensive income (loss) before reclassifications, net of tax — Less amounts reclassified from accumulated other comprehensive income (loss), net of tax — Net other comprehensive income (loss) — Balance - June 30, 2023 $ — |
BASIS OF PRESENTATION - Restruc
BASIS OF PRESENTATION - Restructuring and Other Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Restructuring and other charges | ||||
Restructuring and other charges | $ 415 | $ 1,746 | $ 415 | $ 2,643 |
Treasury stock | ||||
Common stock repurchases as treasury stock including excise tax | $ 3,788 | $ 5,446 | ||
Excise tax rate on certain stock repurchases | 1% | 1% | ||
Cash and cash equivalents and investments | ||||
Interest income on cash equivalents and short-term investments | 4,655 | 1,874 | $ 9,220 | $ 3,182 |
Accrued expenses and other liabilities | ||||
Restructuring and other charges | ||||
Accrued employee termination benefits | 130 | 130 | ||
Employee separations | ||||
Restructuring and other charges | ||||
Restructuring and other charges | $ 415 | 1,701 | $ 415 | 2,399 |
Other charges | ||||
Restructuring and other charges | ||||
Restructuring and other charges | $ 45 | $ 244 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Disaggregation of revenue | ||||
Net sales | $ 736,479 | $ 733,547 | $ 1,368,504 | $ 1,461,092 |
Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 257,459 | 249,902 | 478,728 | 510,913 |
Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 85,577 | 70,554 | 150,479 | 133,875 |
Software | ||||
Disaggregation of revenue | ||||
Net sales | 68,974 | 64,448 | 132,296 | 148,175 |
Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 63,387 | 53,269 | 105,871 | 100,054 |
Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 53,264 | 79,544 | 100,676 | 141,700 |
Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 73,991 | 67,761 | 137,610 | 130,496 |
Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 78,778 | 84,089 | 158,279 | 173,891 |
Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 55,049 | 63,980 | 104,565 | 121,988 |
Enterprise Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 298,808 | 287,153 | 581,467 | 601,096 |
Enterprise Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 89,802 | 87,590 | 180,033 | 201,908 |
Enterprise Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 52,680 | 33,572 | 90,717 | 63,714 |
Enterprise Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 21,628 | 17,561 | 48,748 | 56,795 |
Enterprise Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 15,691 | 18,705 | 28,058 | 31,212 |
Enterprise Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 19,107 | 28,727 | 39,069 | 49,259 |
Enterprise Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 37,265 | 27,322 | 68,529 | 54,042 |
Enterprise Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 38,645 | 41,095 | 80,177 | 88,689 |
Enterprise Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 23,990 | 32,581 | 46,136 | 55,477 |
Business Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 278,198 | 261,027 | 534,067 | 534,141 |
Business Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 97,841 | 88,081 | 189,997 | 183,000 |
Business Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 20,105 | 19,011 | 38,223 | 37,773 |
Business Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 37,775 | 33,828 | 68,427 | 68,404 |
Business Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 34,056 | 22,605 | 55,667 | 46,896 |
Business Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 19,845 | 28,584 | 41,690 | 56,888 |
Business Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 19,981 | 23,654 | 41,733 | 46,467 |
Business Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 28,663 | 26,506 | 59,036 | 55,241 |
Business Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 19,932 | 18,758 | 39,294 | 39,472 |
Public Sector Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 159,473 | 185,367 | 252,970 | 325,855 |
Public Sector Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 69,816 | 74,231 | 108,698 | 126,005 |
Public Sector Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 12,792 | 17,971 | 21,539 | 32,388 |
Public Sector Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 9,571 | 13,059 | 15,121 | 22,976 |
Public Sector Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 13,640 | 11,959 | 22,146 | 21,946 |
Public Sector Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 14,312 | 22,233 | 19,917 | 35,553 |
Public Sector Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 16,745 | 16,785 | 27,348 | 29,987 |
Public Sector Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 11,470 | 16,488 | 19,066 | 29,961 |
Public Sector Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | $ 11,127 | $ 12,641 | $ 19,135 | $ 27,039 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Change in contract liability | |||
Beginning balance - Contract liability | $ 4,206 | $ 4,266 | |
Cash received in advance and not recognized as revenue | 9,769 | 11,980 | |
Amounts recognized as revenue as performance obligations satisfied | (6,875) | (9,683) | |
Ending balance - Contract liability | 7,100 | $ 6,563 | |
Accrued expenses and other liabilities | |||
Contract liabilities | |||
Contract liabilities | $ 7,100 | $ 4,206 |
FAIR VALUE MEASUREMENTS - Avail
FAIR VALUE MEASUREMENTS - Available-for-Sale Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Cash equivalents and short-term investments | ||
Amortized Cost | $ 365,837 | $ 281,252 |
Unrealized Gains | 11 | 103 |
Unrealized Losses | (141) | |
Fair Value | $ 365,707 | $ 281,355 |
Fair value hierarchy - Level 1 | us-gaap:FairValueInputsLevel1Member | us-gaap:FairValueInputsLevel1Member |
Money market funds | Cash and cash equivalents | ||
Cash equivalents and short-term investments | ||
Amortized Cost | $ 108,117 | $ 129,123 |
Fair Value | 108,117 | 129,123 |
U.S. Government treasury securities | Short-term investments | ||
Cash equivalents and short-term investments | ||
Amortized Cost | 257,720 | 152,129 |
Unrealized Gains | 11 | 103 |
Unrealized Losses | (141) | |
Fair Value | $ 257,590 | $ 152,232 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Numerator: | ||||
Net Income (Loss) | $ 26,161 | $ 19,697 | $ 39,315 | $ 33,895 |
Denominator: | ||||
Denominator for basic earnings per share | 26,348,000 | 26,256,000 | 26,355,000 | 26,291,000 |
Dilutive effect of unvested employee stock awards | 172,000 | 109,000 | 167,000 | 109,000 |
Denominator for diluted earnings per share | 26,520,000 | 26,365,000 | 26,522,000 | 26,400,000 |
Earnings per share: | ||||
Basic | $ 0.99 | $ 0.75 | $ 1.49 | $ 1.29 |
Diluted | $ 0.99 | $ 0.75 | $ 1.48 | $ 1.28 |
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 | 6 Months Ended | ||
Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) lease | Jun. 30, 2023 USD ($) | |
Leases | ||||
Number of additional operating or financing leases not yet commenced | lease | 0 | |||
Lease Cost | ||||
Capitalized operating lease cost | $ 485 | $ 904 | $ 944 | $ 1,926 |
Short-term lease cost | 561 | 222 | 1,122 | 350 |
Total lease cost | 1,046 | 1,126 | 2,066 | 2,276 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||||
Operating cash flows | $ 532 | $ 916 | $ 977 | $ 1,872 |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 2 years 5 months 4 days | 3 years 3 months 29 days | 2 years 5 months 4 days | 3 years 3 months 29 days |
Weighted-average discount rate - Capitalized operating leases | 4.21% | 4.04% | 4.21% | 4.04% |
Related Parties | ||||
Lease Cost | ||||
Capitalized operating lease cost | $ 314 | $ 627 | ||
Short-term lease cost | $ 421 | 107 | $ 841 | 214 |
Total lease cost | $ 421 | 421 | $ 841 | 841 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||||
Operating cash flows | $ 314 | $ 627 | ||
Weighted-average remaining lease term - Capitalized operating leases (in years) | 5 months 1 day | 5 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 | $ 485 | $ 590 | $ 944 | $ 1,299 |
Short-term lease cost | 140 | 115 | 281 | 136 |
Total lease cost | 625 | 705 | 1,225 | 1,435 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||||
Operating cash flows | $ 532 | $ 602 | $ 977 | $ 1,245 |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 2 years 5 months 4 days | 3 years 7 months 2 days | 2 years 5 months 4 days | 3 years 7 months 2 days |
Weighted-average discount rate - Capitalized operating leases | 4.28% | 4.06% | 4.28% | 4.06% |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Future lease payments over the remaining term of capitalized operating leases | ||
2024, excluding the six months ended June 30, 2024 | $ 1,107 | |
2025 | 1,980 | |
2026 | 1,205 | |
2027 | 237 | |
2028 | 161 | |
Total | 4,690 | |
Imputed interest | (231) | |
Lease liability balance | 4,459 | |
Right-of-use assets | 3,917 | $ 4,340 |
Long-term lease liability | 2,497 | 3,181 |
Short-term lease liability | $ 1,962 | $ 1,733 |
Short-term 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 | ||
2024, excluding the six months ended June 30, 2024 | $ 713 | |
2025 | 163 | |
2026 | 163 | |
2027 | 1 | |
Total | 1,040 | |
Others | ||
Future lease payments over the remaining term of capitalized operating leases | ||
2024, excluding the six months ended June 30, 2024 | 394 | |
2025 | 1,817 | |
2026 | 1,042 | |
2027 | 236 | |
2028 | 161 | |
Total | $ 3,650 |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 USD ($) segment | Jun. 30, 2023 USD ($) segment | Jun. 30, 2024 USD ($) segment | Jun. 30, 2023 USD ($) segment | Dec. 31, 2023 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 | $ 736,479 | $ 733,547 | $ 1,368,504 | $ 1,461,092 | |
Operating income (loss): | |||||
Operating income (loss) | 30,919 | 25,071 | 44,383 | 43,188 | |
Interest income, net | 4,649 | 1,874 | 9,216 | 3,160 | |
Income before taxes | 35,568 | 26,945 | 53,599 | 46,348 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 3,273 | 3,094 | 6,539 | 6,167 | |
Total assets: | |||||
Total assets | 1,283,485 | 1,164,275 | 1,283,485 | 1,164,275 | $ 1,188,381 |
Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 298,808 | 287,153 | 581,467 | 601,096 | |
Business Solutions | |||||
Net sales: | |||||
Net sales | 278,198 | 261,027 | 534,067 | 534,141 | |
Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 159,473 | 185,367 | 252,970 | 325,855 | |
Operating Segments | Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 298,808 | 287,153 | 581,467 | 601,096 | |
Operating income (loss): | |||||
Operating income (loss) | 10,230 | 7,511 | 16,077 | 14,033 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 221 | 423 | 426 | 847 | |
Total assets: | |||||
Total assets | 729,450 | 678,104 | 729,450 | 678,104 | |
Operating Segments | Business Solutions | |||||
Net sales: | |||||
Net sales | 278,198 | 261,027 | 534,067 | 534,141 | |
Operating income (loss): | |||||
Operating income (loss) | 22,229 | 18,831 | 38,018 | 35,384 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 147 | 158 | 310 | 317 | |
Total assets: | |||||
Total assets | 537,655 | 472,566 | 537,655 | 472,566 | |
Operating Segments | Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 159,473 | 185,367 | 252,970 | 325,855 | |
Operating income (loss): | |||||
Operating income (loss) | 2,714 | 1,650 | (2,636) | 1,679 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 23 | 20 | 46 | 39 | |
Total assets: | |||||
Total assets | 107,382 | 102,652 | 107,382 | 102,652 | |
Headquarters/Other | |||||
Operating income (loss): | |||||
Operating income (loss) | (4,254) | (2,921) | (7,076) | (7,908) | |
Depreciation and amortization: | |||||
Depreciation and amortization | 2,882 | 2,493 | 5,757 | 4,964 | |
Total assets: | |||||
Assets net of intercompany balance eliminations | (91,002) | (89,047) | (91,002) | (89,047) | |
Intersegment Elimination | |||||
Total assets: | |||||
Total assets | $ (59,751) | $ (55,432) | $ (59,751) | $ (55,432) |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2024 USD ($) | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at beginning of period | $ 81 |
Other comprehensive income (loss) before reclassifications, net of tax | (158) |
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax | 26 |
Net other comprehensive income (loss) | (184) |
Balance at end of period | $ (103) |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Subordinated Borrowing | ||
Line of credit, borrowing capacity | $ 50,000 | $ 50,000 |
Credit facility, expiration date | Mar. 31, 2025 | |
Line of credit, maximum borrowing capacity | $ 80,000 | |
Debt instrument, interest rate | 8.50% | |
Debt instrument, variable interest rate, type | us-gaap:PrimeRateMember | |
Proceeds from short-term borrowings | $ 10,560 | 67,895 |
Line of credit, outstanding borrowing | 0 | 0 |
Line of credit, available for borrowing | $ 50,000 | $ 50,000 |
Maximum | ||
Subordinated Borrowing | ||
Debt ratio | 2 |