Pc Connection, Inc. · NASDAQ:CNXN

Pc Connection — Raymond James IT Supply Chain Conference 2004

29 slides from Pc Connection's conference presentation, Dec 9, 2004

  1. Slide 1: Raymond James IT Supply Chain Conference

    RAYMOND JAMES IT SUPPLY CHAIN CONFERENCE December 9, 2004 Patricia Gallup, Chief Executive Officer Stephen Baldridge, VP of Finance & Corporate Controller

  2. Slide 2: Safe Harbor Statement

    Safe Harbor Statement “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This release 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 econo

  3. Slide 3: PC Connection, Inc.

    PC Connection, Inc. Fortune 1000 Founded 1982 Employees* 1,360 Exchange NASDAQ Symbol PCCC Shares Outstanding* 25.1 Million Float* 7.9 Million Market Capitalization* $172 Million 2003 Sales: $1.31 Billion Total Book Value Per Share* $6.54 Tangible Book Value Per Share* $4.63 Closing Price – 11/30/04

  4. Slide 4: Business Overview

    Business Overview A rapid response provider of information technology (IT) products and solutions Operates through three sales subsidiaries Relationship-based model with 571 sales representatives as of September 30, 2004 Offering more than 100,000 brand-name products Multiple vendor relationships

  5. Slide 5: A Widely Recognized Brand Name

    PC Connection, A Widely Recognized Brand Name

  6. Slide 6: Building Brand Awareness

    Building Brand Awareness — PC Connection: GovConnection’ = MORE’ DIRECT NC contac

  7. Slide 7: Broad Product Selection

    Broad Product Selection

  8. Slide 8: Cisco Systems

    i) tosniea Cisco Systems

  9. Slide 9: Organizational Structure & Business Segments

    Organizational Structure & Business Segments PC Connection, Inc. (Parent Holding Company) PC Connection Sales Corporation (dba PC Connection®) • Small- and Medium-Sized Business Sales Merrimack Services Corporation (dba PC Connection Services) Distribution Sales Support & Services Human Resources In

  10. Slide 10: PC Connection Sales Corporation (SMB)

    PC Connection Sales Corporation (SMB) Focused on small- and medium-sized businesses (SMBs: 20-500 seats) Utilize outbound telemarketing (394 reps), catalog, and Web site marketing Differentiated by providing superior service and value to customers September ‘04 YTD sales – $597 million

  11. Slide 11: GovConnection, Inc. (Public Sector)

    GovConnection, Inc. (Public Sector) Focused on Public Sector: Four distinct markets Federal K-12 State and Local Higher Ed Utilize field sales, outbound telemarketing (104 reps), teaming, catalog, and Web site Awarded new GSA Schedule September’ 04 YTD sales – $195 million

  12. Slide 12: MoreDirect, Inc. (Large Account)

    MoreDirect, Inc. (Large Account) Focused on large customer segment (>500 seats) Knowledgeable, high-level field sales account managers (73 reps) with 10-20 years experience in IT hardware Aggregates inventories of leading wholesale distributors and manufacturers (virtual inventory–no warehousing or

  13. Slide 13: Pursuing Market Opportunities

    Pursuing Market Opportunities Company Market (1) Market Company Segments Opportunity Share (2) Small- and Medium-Sized Businesses $75 Billion 1.1% Government & Education 40 Billion 0.6% Large Corporate Accounts 85 Billion 0.3% Total $200 Billion 0.7% (1) IDC and PC Connection estimate (2) PC Connect

  14. Slide 14: Growth Strategies Overview

    Growth Strategies Overview Improve Sales Productivity Increase the Number of Sales Representatives Continue Margin Rate Improvement Expand Product and Service Offerings Voice Over Internet Protocol (VOIP) ServiceConnection Pursue Strategic Initiatives

  15. Slide 15: Improve Sales Productivity

    Improve Sales Productivity ($ amounts in thousands) Average Productivity Sales Reps Annual Company Segments Annual 2004 (1) Target Small- and Medium-Sized Businesses 394 $ 2,030 $ 2,500 Government & Education 104 2,500 3,200 Large Corporate Account 73 4,040 4,500 Total/Average 571 $ 2,373 $ 2,900 (1

  16. Slide 16: Annualized Sales Rep Productivity

    Annualized Sales Rep Productivity(1) (Amounts in thousands) $5,000 $4,500 +26.5% $4,000 +17.7% $3,500 $3,000 $2,500 +8.2% (60.0%) 2003 $2,000 2004 $1,500 $1,000 $500 $0 SMB SLED Large Federal Account (1) Represents Q3 annualized sales rep productivity

  17. Slide 17: Increase the Number of Sales Representatives

    Increase the Number of Sales Representatives Enhance recruitment efforts at current call centers Consider additional call centers Expand the number of field reps in our Large Account and Public Sector segments Investigate Virtual Call Centers for SMB segment

  18. Slide 18: Strategic Initiatives

    Strategic Initiatives Internal K2 Monadnock Rapid Response Sales Support External ServiceConnection Acquisition Opportunities

  19. Slide 19: Financial Summary

    Financial Summary Stephen Baldridge, VP of Finance & Corporate Controller

  20. Slide 20: Operating Results–Consolidated

    Operating Results–Consolidated (Amounts in thousands, except EPS) Q3 2004 Q3 2003 Sept 04 YTD Sept 03 YTD Net Sales $ 351,265 $ 349,420 $ 1,014,235 $ 954,515 Gross Profit 39,406 35,926 109,493 101,358 % of Net Sales 11.2% 10.3% 10.8% 10.6% SG&A Expenses 32,765 32,059 94,938 91,716 % of Net Sales 9.3

  21. Slide 21: Net Sales by Segment

    Net Sales by Segment ($ amounts in thousands) Large Account Public Sector $400,000 SMB $350,000 $66,259 $77,458 $300,000 $66,359 $59,969 $77,942 $52,255 $250,000 $53,852 $77,864 $75,023 $63,355 $103,596 $52,632 $200,000 $150,000 $207,424 $194,058 $195,943 $100,000 $178,640 $186,576 $179,565 $50,000

  22. Slide 22: Gross Margin % of Sales

    Gross Margin% of Sales Q3 Q3 2004 2003 SMB 12.2% 11.2% Public Sector 9.8% 8.0% Large Account 10.2% 11.3% Consolidated 11.2% 10.3%

  23. Slide 23: SG&A % of Sales

    SG&A% of Sales 11.0% 10.2% 10.0% 9.5% 9.4% 9.0% 8.0% FY 2002 FY 2003 Sept. 2004 YTD

  24. Slide 24: Operating Margin % of Sales

    Operating Margin % of Sales 1.6% 1.4% 1.2% 1.0% 0.8% 1.4% 0.6% 1.2% 1.1% 1.0% 0.4% 0.8% 0.7% 0.2% 0.0% 2003 2004 2003 2004 2003 2004 Q1 Q2 Q3

  25. Slide 25: Diluted Earnings per Share

    Diluted Earnings per Share $0.18 $0.16 $0.16 $0.14 $0.11 $0.12 $0.09 $0.10 Additional Pro Forma (1) $0.07 $0.07 GAAP $0.08 $0.06 $0.06 $0.11 $0.09 $0.09 $0.04 $0.06 $0.06 $0.05 $0.02 $0.00 2003 2004 2003 2004 2003 2004 Q1 Q2 Q3 (1) Pro forma EPS exclude special charges

  26. Slide 26: Reconciliation Between GAAP and Pro Forma Results

    A Reconciliation Between GAAP and Pro Forma Results This information is being furnished so as to allow for a comparison of our operating results without special charges. ($ in thousands, except EPS) Q1 Q2 Q3 2003 2004 2003 2004 2003 2004 GAAP Net Income: $ 1,575 $ 1,158 $ 1,403 $ 2,256 $ 2,180 $ 2,8

  27. Slide 27: Asset Utilization

    Asset Utilization Q3 2004 Q3 2003 DSO 41 48 Inventory Turns 16 19

  28. Slide 28: Financial Model

    Financial Model Sept Two-Year YTD Target 2001 2002 2003 2004 Ranges REVENUE GROWTH (17.6)% 0.4% 10.2% 6.3% 15% + (annual) EPS GROWTH (75.4)% (56.7)% 76.9 % 19.0% 30% + (annual) GROSS PROFIT 11.1% 10.8% 10.5% 10.8% 11.3-11.8% MARGIN SG&A (1) 9.9% 10.2% 9.5% 9.4% 8.8%-9.3% OPERATING MARGIN 1.0% 0.5% 0

  29. Slide 29: ase

    ase = PC Connection we solve IT.

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