Pc Connection, Inc. · NASDAQ:CNXN
Pc Connection — Raymond James IT Supply Chain Conference 2005
25 slides from Pc Connection's conference presentation, Nov 15, 2005
Slide 1: Raymond James IT Supply Chain Conference
RAYMOND JAMES IT SUPPLY CHAIN CONFERENCE November 15, 2005 Patricia Gallup, Chairman & Chief Executive Officer Stephen Baldridge, VP of Finance & Corporate Controller
Slide 2: Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995: This presentation contains forward- looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of changes in market demand and the overall level of economic activity, or in the level of busines
Slide 3: Fortune 1000 company facts
Fortune 1000 Founded 1982 Employees 1,440 Exchange NASDAQ Symbol PCCC Shares Outstanding 25.2 Million Float 8.1 Million 2004 Sales $1.35 Billion Market Capitalization $137 Million Total Book Value Per Share $6.79 Tangible Book Value Per Share $4.63 Closing Price–9/30/05 $5.44
Slide 4: Corporate Structure
Corporate Structure PC Connection, Inc. PC Connection, Inc. (Holding Company) (Holding Company) GovConnection, Inc. GovConnection, Inc. • Federal Government • State, Local, Education PC Connection PC Connection Sales Corporation Sales Corporation (dba PC Connection) (dba PC Connection ) ) Small-and
Slide 5: Company Overview
Company Overview • Multi-branded strategy that leads with solution-selling • Sales and sales support subsidiaries targeting specific segments • More than 100,000 brand-name products and solutions from more than 1,400 manufacturers • Major vendor partners; long-standing alliances – HP, Apple, Toshiba
Slide 6: PC Connection, Inc. 2005
2005 PC Connection, Inc. PC Connection, Inc. PC Connection Sales Corporation GovConnection, Inc. Other Parties MoreDirect, Inc. (potential) Merrimack Services Corporation (dba PC Connection Services) Sales Support Services
Slide 7: PC Connection, Inc. 2005
2005 PC Connection, Inc. PC Connection, Inc. PC Connection Sales Corporation GovConnection, Inc. Other Parties MoreDirect, Inc. (potential) Merrimack Services Corporation (dba PC Connection Services) Sales Support Services
Slide 8: Customer Focus
• Customer Focus – Companies with less than 500 employees – Consumers – Sales supports customers without IT departments • Strategy – Telephonic/digital solution selling – Rapid response and solution selling of IT products and services • Marketing – In-bound and out-bound sales; Business-to-Business;
Slide 9: Customer Focus
• Customer Focus – The Public Sector; in-house IT • Federal • K-12 • State and Local • Higher Ed • Strategy – Solution-selling; contract selling; teaming • Marketing – Field sales, out-bound tele-sales, catalog, Web, tradeshows/events • Growth: Year-over-year growth Q304 – Q305 of 12.1% – Increase n
Slide 10: Customer Focus
• Customer Focus – Companies with 500+ employees – Technical IT department • Strategy – Field sales model – Low SG&A rate • Marketing – Customer tie-in via TRAXX ® e-procurement system – TRAXX aggregates IT solution procurement over the Web • Growth: Year-over-year growth Q304–Q305 of 3.8% – Increas
Slide 11: New subsidiary of PC Connection, Inc.
• New subsidiary of PC Connection, Inc. Customer Focus: Small-to-large businesses • Strategy – Skuable services to businesses with <500 employees Warranty Support 24x7 Help Desk Remote Monitoring Remote Backup – Professional services to businesses with 500+ employees Data Migration Active Data Upgra
Slide 12: Subsidiary supporting all sales and service companies
• Subsidiary supporting all sales and service companies Product Management Purchasing Distribution Human Resources Sales Support Finance Marketing Administration Web Facilities Advertising • Lower SG&A through consolidating subsidiary support • Rapid response support for sales – One solution call ce
Slide 13: PC Connection, Inc.
PC Connection, Inc. = SSS PC Connection MacConnection GoyConnection: mic) aE
Slide 14: Recent Acquisition Update
• Amherst Technologies focused on products and services to medium-to-large corporations • Assets incorporated into various subsidiaries • New sales and services certifications from leading enterprise vendors – IBM, HP, Cisco and other high-end systems certifications Recent Acquisition Update
Slide 15: Growth Strategies Summary
Growth Strategies Summary • Increase solutions offerings • Increase number of sales representatives • Expand public sector contract vehicles • Lower SG&A through IT automation of sales-related systems • Improve overall sales productivity • Continually look for opportunities to acquire companies that
Slide 16: Financial Summary
Financial Summary Stephen Baldridge, VP of Finance & Corporate Controller
Slide 17: Operating Results – Consolidated
Operating Results – Consolidated $ 0.25 $ 0.18 $ 0.11 $ 0.08 EPS (GAAP) 0.6% 0.4% 0.8% 0.5% % of Net Sales $ 6,231 $ 4,436 $ 2,817 $ 1,924 Net Income 1.1% 0.8% 1.4% 1.0% % of Net Sales 10,972 8,599 4,841 3,696 Operating Income 3,583 1,800 Special Charges 9.4% 10.6% 9.3% 10.1% % of Net Sales 94,938 1
Slide 18: Product Mix Q3 2005 vs. Q3 2004
2004 % of Net Sales 2005 % of Net Sales Product Mix – Q3 2005 vs. Q3 2004 100.0% 100.0% 9.6% 10.6% Accessories/Other 5.4% 4.9% Memory & System Enhancements 11.8% 11.8% Video, Imaging, & Sound 10.6% 10.8% Printers & Printer Supplies 7.3% 7.8% Net/Com Products 11.9% 12.1% Software 7.9% 8.7% Storage De
Slide 19: Net Sales by Segment
$207,424 $66,359 $53,852 $200,325 $76,366 $47,160 $194,058 $77,942 $63,355 $207,296 $78,457 $64,957 $195,943 $77,458 $77,864 $203,493 $80,382 $87,249 ($ amounts in thousands) Net Sales by Segment $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Public Sector Large Account SM
Slide 20: Gross Margin % of Sales
Q3 2004 Q3 2005 Gross Margin % of Sales 11.2% 11.3% Consolidated 10.2% 9.8% Large Account 9.8% 9.2% Public Sector 12.2% 12.9% SMB
Slide 21: SG&A % of Sales
SG&A % of Sales Note: SG&A rates exclude special charges; 2004 and 2005 include increases of 0.4% and 1.0%, respectively, from EITF reclassification. ( FY ‘04 and FY ‘05 include EITF) 10.2% 9.5% 9.8% 10.6% 8.0% 9.0% 10.0% 11.0% FY 2002 FY 2003 FY 2004 Sept 05 YTD
Slide 22: Operating Margin % of Sales
Operating Margin % of Sales 0.7% 0.6% 1.2% 0.9% 1.4% 1.0% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4% 1.6% 2004 2005 Q1 2004 2005 Q2 2004 2005 Q3
Slide 23: Diluted Earnings Per Share
Diluted Earnings Per Share $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 $0.18 2004 2005 Q2 2004 2005 Q3 2004 2005 Q1 $0.05 $0.04 $0.09 $0.06 $0.11 $0.08
Slide 24: Working Capital Metrics
Q3 ‘04 Q3 ‘05 Working Capital Metrics 3.8% 8.3% Debt/Capital Ratio $18,511 $10,588 Cash Flow from Operations Inventory Turns Days Sales Outstanding
Slide 25: PC Connection, Inc.
PC Connection, Inc.
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