Connection (CNXN) Reports Second Quarter 2026 Results

About this update from Pc Connection, Inc.

Connection (PC Connection, Inc.; NASDAQ: CNXN), a leading information technology solutions provider to business, government, healthcare and education markets, today announced results for the second quarter ended June 30, 2026. The Company also announced that its Board of Directors declared a quarterly dividend of $0.20 per share of the Company’s common stock. Payment will be made on August 28, 2026, to shareholders of record on August 11, 2026. "Our record financial performance reflects more than strong execution—it reflects the value that our customers are placing on their enterprise technology," said Timothy McGrath, President and Chief Executive Officer. McGrath continued, "As organizations increasingly operationalize AI, they need trusted partners like Connection who can modernize infrastructure, strengthen security, integrate cloud and data platforms, and deliver measurable business outcomes." Second Quarter of 2026 Results : Net sales for the quarter ended June 30, 2026 increased by 12.4%, year over year. Gross billings increased by 14.0% to $1.2 billion, compared to $1.0 billion in the second quarter of 2025 1 . Gross profit increased by 14.3% to $157.5 million, compared to $137.8 million for the second quarter of 2025, and gross margin increased 30 basis points to 18.4%, compared to the prior year quarter. Net income increased 33.8% to $33.2 million, or $1.31 per diluted share, compared to $24.8 million, or $0.97 per diluted share, for the second quarter of 2025. Performance by Segment : Net sales for the Business Solutions segment increased by 17.3% to $343.9 million in the second quarter of 2026, compared to $293.2 million in the prior year quarter. Gross billings increased by 16.7% to $496.1 million, compared to $425.1 million in the prior year quarter 1 . Gross profit increased by 14.9% to $79.1 million, compared to $68.9 million in the prior year quarter. Gross margin decreased by 50 basis points to 23.0% for the second quarter of 2026. Net sales for the Public Sector Solutions segment remained consistent at $140.5 million for the second quarter of 2026 and 2025. Gross billings increased by 1.7% to $197.1 million, compared to $193.8 million in the prior year quarter 1 . Gross profit increased by 9.2% to $23.2 million, compared to $21.3 million in the prior year quarter. Gross margin increased by 130 basis points to 16.5% for the second quarter of 2026. Net sales for the Enterprise Solutions segment increased by 13.4% to $369.6 million in the second quarter of 2026, compared to $326.0 million in the prior year quarter. Gross billings increased by 17.0% to $477.0 million, compared to $407.5 million in the prior year quarter 1 . Gross profit increased by 15.8% to $55.2 million, compared to $47.6 million in the prior year quarter. Gross margin increased by 30 basis points to 14.9% for the second quarter of 2026. Sales by Product Mix : Notebook/mobility and desktop sales increased by 19% year over year and accounted for 51% of net sales in the second quarter of 2026, compared to 48% of net sales in the second quarter of 2025. Software sales increased by 15% year over year and accounted for 9% of net sales in the second quarter of both 2026 and 2025. Servers/storage sales decreased by 18% year over year and accounted for 7% of net sales in the second quarter of 2026, compared to 9% of net sales in the second quarter of 2025. Networking sales increased by 12% year over year and accounted for 7% of net sales in the second quarter of both 2026 and 2025. Accessories sales increased by 10% year over year and accounted for 10% of net sales in the second quarter of both 2026 and 2025. Selling, general and administrative (“SG&A”) expenses increased in the second quarter of 2026 by 7.1% to $114.5 million from $106.9 million in the prior year quarter. SG&A as a percentage of net sales decreased to 13.4%, compared to 14.1% in the prior year quarter. Interest income in the second quarter of 2026 was $2.5 million, compared to $3.2 million in the second quarter of 2025. Cash and cash equivalents and short-term investments were $340.7 million as of June 30, 2026, compared to $406.7 million as of December 31, 2025. Six Months of 2026 Results : Net sales for the six months ended June 30, 2026 increased by 7.9%, compared to the six months ended June 30, 2025. Gross billings increased by 9.3% to $2.2 billion, compared to $2.0 billion for the six months ended June 30, 2025 1 . Gross profit increased by 9.5% to $290.2 million, compared to $265.1 million for the six months ended June 30, 2025, and gross margin increased 30 basis points to 18.4%, compared to the six months ended June 30, 2025. Net income for the six months ended June 30, 2026 increased by 31.7% to $50.4 million, or $1.99 per diluted share, compared to net income of $38.3 million, or $1.48 per diluted share, for the six months ended June 30, 2025. Adjusted Diluted Earnings per Share 2 increased to $2.08 per share for the six months ended June 30, 2026, compared to $1.56 per share for the six months ended June 30, 2025. Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense, restructuring and other charges and non-routine legal settlements (“Adjusted EBITDA”) 2 increased 18% to $144.5 million for the twelve months ended June 30, 2026, compared to $122.5 million for the twelve months ended June 30, 2025. ____________________ 1 Gross billings is the total dollar value of goods and services billed during the period, net of customer returns, credit memos, and any applicable sales or other taxes and include agency fees, and freight. As certain transactions are recognized on a net basis, gross billings include amounts not recognized in net sales. 2 Adjusted Diluted Earnings per Share and Adjusted EBITDA are non-GAAP measures. See page 10 for definitions and reconciliations of these measures. Conference Call and Webcast Connection will host a conference call and live web cast today, July 29, 2026 at 4:30 p.m. EDT to discuss its second quarter financial results. For participants who would like to participate via telephone, please register here to receive the dial-in number along with a unique PIN number that is required to access the call. A web-cast of the conference call, which will be broadcast live via the Internet, and a copy of this press release, can be accessed on Connection’s website at ir.connection.com. For those unable to participate in the live call, a replay of the webcast will be available at ir.connection.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year. Non-GAAP Financial Information EBITDA, Adjusted EBITDA, LTM Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share are non-GAAP financial measures. These measures are included to provide additional information with respect to the Company’s operating performance and earnings. Non-GAAP measures are not a substitute for GAAP measures and should be considered together with the GAAP financial measures. Our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Definitions for each Non-GAAP measure and a reconciliation to their most directly comparable GAAP measures are available in the tables at the end of this release. About Connection PC Connection, Inc. and its subsidiaries, dba Connection, ( www.connection.com ; NASDAQ: CNXN) is a Fortune 1000 company headquartered in Merrimack, NH. With offices throughout the United States, Connection delivers custom-configured IT solutions from its ISO 9001:2015 SOC 2 Type 2 certified Technology Integration and Distribution Center in Wilmington, OH. In addition, the Company has more than 5,000 professional certifications to ensure that it can solve the most complex issues of its customers. Connection also services international customers through its GlobalServe subsidiary, a global IT procurement and service management company. Investors and media can find more information about Connection at http://ir.connection.com . Connection Business Solutions (800.800.5555) is a rapid-response provider of IT products and services serving primarily the small- and medium-sized business sector. It offers more than 460,000 brand-name products through its staff of technically trained sales account managers, publications, and its website at www.connection.com . Connection–Enterprise Solutions (561.237.3300), www.connection.com/enterprise , provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and real-time access to over 460,000 products and 1,600 vendors through MarkITplace ® , a proprietary next-generation, cloud-based supply chain solution. The team’s engineers, software licensing specialists, and subject matter experts help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle. Connection Public Sector Solutions (800.800.0019), is a rapid-response provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, publications, and online at www.connection.com/publicsector . Cautionary Note Regarding Forward-Looking Statements This earnings release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and include statements concerning, among other things, our future financial results, business plans (including statements regarding new products and services we may offer and future expenditures, costs and investments), liabilities, impairment charges, competition and the expected impact of current macroeconomic conditions on our businesses and results of operations. You can generally identify forward-looking statements because they may contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “anticipates,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions, although not all forward-looking statements include such terms. These statements reflect our current views and are based on assumptions as of the date of this report. Such assumptions are based upon internal estimates and other analysis of current market conditions and trends, management’s expectations, plans and strategies, economic conditions and other factors. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements. Such differences may result from actions taken by us, including expense reduction or strategic initiatives (including reductions in force, capital investments and new or expanded product offerings or services), the execution of our business plans (including our inventory management, cost structure and management and other personnel decisions) or other business decisions, as well as from developments beyond our control, including; macroeconomic factors facing the global economy, including disruptions in or increased volatility of the capital markets, changes in trade policy, which may include the imposition of tariffs or other trade barriers, economic sanctions and economic slowdowns or recessions, government shutdowns, the impact of conflicts in Iran and the Middle East, changes in tax policy, rising inflation and changing interest rates modifying our potential for investment income and the timing thereof or reducing the level of investment our customers are willing to make in IT products; supply constraints, such as the global memory (DRAM and NAND) shortage; substantial competition reducing our market share; significant price competition reducing our profit margins; the loss of any of our major vendors adversely affecting the number or type of products we may offer; virtualization of information technology resources and applications, including networks, servers, applications, and data storage disrupting or altering our traditional distribution models; service interruptions at third party shippers negatively impacting our ability to deliver the products we offer to our customers; increases in shipping and postage costs reducing our margins and adversely affecting our results of operations; loss of key persons or the inability to attract, train and retain qualified personnel adversely affecting our ability to operate our business; and cyberattacks or the failure to safeguard personal information and our IT systems resulting in liability and harm to our reputation. Additional factors include those described in our Annual Report on Form 10-K for the year ended December 31, 2025, including under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” in our subsequent Quarterly Reports on Form 10-Q, including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in the other subsequent filings we make with the Securities and Exchange Commission from time to time. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances. You should not place undue reliance on the forward-looking statements included in this release. We assume no obligation to update any of these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated, to reflect circumstances or events that occur after the statements are made except as required by law. CONSOLIDATED SELECTED FINANCIAL INFORMATION                             At or for the Three Months Ended June 30,     2026   2025   % Change Operating Data:                       Net sales (in thousands)   $ 853,996     $ 759,693     12 % Diluted earnings per share   $ 1.31     $ 0.97     35 %                         Gross margin     18.4 %     18.1 %       Operating margin     5.0 %     4.1 %                               Inventory turns (1)     15       17         Days sales outstanding (2)     71       68                                       % of       % of         Product Mix:     Net Sales       Net Sales         Notebooks/Mobility     40 %     34 %       Desktops     11       14         Accessories     10       10         Software     9       9         Displays and Sound     9       9         Servers/Storage     7       9         Net/Com Products     7       7         Other Hardware/Services     7     8       Total Net Sales     100 %   100 %                 Stock Performance Indicators:                       Actual shares outstanding (in thousands)     25,238       25,396         Closing price   $ 72.99     $ 65.78         Market capitalization (in thousands)   $ 1,842,122     $ 1,670,549         Trailing price/earnings ratio     19.3       20.1         LTM Net Income (in thousands)   $ 95,843     $ 86,050         LTM Adjusted EBITDA (3) (in thousands)   $ 144,480     $ 122,461         (1) Represents the annualized cost of goods sold for the period divided by the average inventory for the prior four-month period. (2) Represents the trade receivable at the end of the period divided by average daily net sales for the same three-month period. (3) LTM Adjusted EBITDA is a non-GAAP measure defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation, severance expenses and non-routine legal settlements for the last twelve months. See page 10 for a reconciliation. REVENUE AND MARGIN INFORMATION     For the Three Months Ended June 30,     2026   2025     Net   Gross   Net   Gross (amounts in thousands)   Sales   Margin   Sales   Margin Enterprise Solutions   $ 369,620   14.9 %   $ 326,011   14.6 % Business Solutions     343,870   23.0       293,168   23.5   Public Sector Solutions     140,506 16.5       140,514 15.2   Total   $ 853,996 18.4 %   $ 759,693 18.1 % CONDENSED CONSOLIDATED STATEMENTS OF INCOME     Three Months Ended June 30,   Six Months Ended June 30, (amounts in thousands, except per share data)   2026   2025   2026   2025 Net sales   $ 853,996     $ 759,693     $ 1,575,862     $ 1,460,739   Cost of sales     696,523       621,927       1,285,652       1,195,662   Gross profit     157,473       137,766       290,210       265,077   Selling, general and administrative expenses     114,461       106,869       223,913       216,728   Severance expenses     —       —       3,060       2,930   Income from operations     43,012       30,897       63,237       45,419   Interest income, net     2,525       3,216       5,888       7,116   Other income     —       —       —       76   Income tax provision     (12,369 )     (9,324 )     (18,734 )     (14,341 ) Net income   $ 33,168     $ 24,789     $ 50,391     $ 38,270                             Earnings per common share:                         Basic   $ 1.31     $ 0.98     $ 2.00     $ 1.49   Diluted   $ 1.31     $ 0.97     $ 1.99     $ 1.48                             Shares used in the computation of earnings per common share:                         Basic     25,226       25,405       25,214       25,739   Diluted     25,339       25,520       25,309       25,860   CONDENSED CONSOLIDATED BALANCE SHEETS     June 30,   December 31, (amounts in thousands)   2026   2025 ASSETS             Current Assets:             Cash and cash equivalents   $ 123,717     $ 193,221   Short-term investments     216,973       213,457   Accounts receivable, net     726,823       648,020   Inventories, net     205,095       143,567   Prepaid expenses and other current assets     21,533       22,607   Total current assets     1,294,141       1,220,872   Property and equipment, net     45,762       46,912   Right-of-use assets, net     7,315       1,569   Goodwill     73,602       73,602   Intangibles, net     473       989   Other assets     6,341       6,981   Total Assets   $ 1,427,634     $ 1,350,925                 LIABILITIES AND STOCKHOLDERS’ EQUITY             Current Liabilities:             Accounts payable   $ 377,556     $ 338,202   Accrued payroll     24,978       30,939   Accrued expenses and other liabilities     46,792       51,251   Total current liabilities     449,326       420,392   Deferred income taxes     18,981       19,905   Operating lease liability     6,677       498   Total Liabilities     474,984       440,795   Stockholders’ Equity:             Common stock     296       295   Additional paid-in capital     149,530       144,608   Retained earnings     946,196       905,890   Accumulated other comprehensive (loss) income     (208 )     78   Treasury stock at cost     (143,164 )     (140,741 ) Total Stockholders’ Equity     952,650       910,130   Total Liabilities and Stockholders’ Equity   $ 1,427,634     $ 1,350,925   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     Three Months Ended June 30,   Six Months Ended June 30, (amounts in thousands)   2026   2025   2026   2025 Cash Flows (used in) provided by Operating Activities:                         Net income   $ 33,168     $ 24,789     $ 50,391     $ 38,270   Adjustments to reconcile net income to net cash (used in) provided by operating activities:                         Depreciation and amortization     2,736       2,866       5,533       5,965   Adjustments to credit losses reserve     1,557       663       1,796       1,058   Stock-based compensation expense     2,653       2,461       5,292       4,669   Deferred income taxes     (682 )     —       (848 )     —   Amortization of discount on short-term investments, net     (555 )     (1,627 )     (1,444 )     (1,672 ) Gain on sale of short-term investments     —       —       —       (76 ) Loss on disposal of fixed assets     24       4       74       20   Changes in assets and liabilities:                         Accounts receivable     (66,899 )     (33,716 )     (80,599 )     (26,662 ) Inventories     (10,801 )     18,305       (61,528 )     (38,433 ) Prepaid expenses and other current assets     1,849       (1,474 )     1,074       (4,142 ) Other non-current assets     66       (1,713 )     640       (1,629 ) Accounts payable     (18,758 )     30,326       39,328       3,368   Accrued expenses and other liabilities     (8,167 )   (14,626 )     (9,251 )   (6,865 ) Net cash (used in) provided by operating activities     (63,809 )   26,258       (49,542 )   (26,129 ) Cash Flows (used in) provided by Investing Activities:                         Purchases of short-term investments     (51,380 )     —       (105,650 )     (52,358 ) Proceeds from sale of short-term investments     —       —       —       108,763   Maturities of short-term investments     49,999       —       103,216       50,000   Purchases of property and equipment     (1,931 )     (1,620 )     (3,915 )     (3,331 ) Net cash (used in) provided by investing activities     (3,312 )   (1,620 )     (6,349 )   103,074   Cash Flows used in Financing Activities:                         Proceeds from short-term borrowings     —       —       —       732   Repayment of short-term borrowings     —       —       —       (732 ) Purchase of common stock for treasury shares     —       (16,725 )     (2,481 )     (60,464 ) Payments for excise tax on purchase of common stock for treasury shares     (678 )     (36 )     (678 )     (36 ) Dividend payments     (5,045 )     (3,810 )     (10,085 )     (7,720 ) Issuance of common stock under Employee Stock Purchase Plan     602       619       602       619   Payment of payroll taxes on stock-based compensation through shares withheld     (300 )     (399 )     (971 )     (918 ) Net cash used in financing activities     (5,421 )   (20,351 )     (13,613 )   (68,519 ) (Decrease) increase in cash and cash equivalents     (72,542 )     4,287       (69,504 )     8,426   Cash and cash equivalents, beginning of period     196,259     182,457       193,221     178,318   Cash and cash equivalents, end of period   $ 123,717   $ 186,744     $ 123,717   $ 186,744                             Non-cash Investing and Financing Activities:                         Accrued purchases of property and equipment   $ 111     $ 346     $ 111     $ 346   Accrued purchase of treasury shares   $ —     $ 66     $ —     $ 66   Accrued excise tax on treasury purchases   $ —     $ 572     $ —     $ 572   EBITDA AND ADJUSTED EBITDA A reconciliation of EBITDA and Adjusted EBITDA to Net Income is detailed below. Adjusted EBITDA is defined as EBITDA (defined as earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation, severance expenses and non-routine legal settlements. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either includes or excludes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance including our ability to fund our future capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreement. When analyzing our operating performance, investors should use EBITDA and Adjusted EBITDA in addition to, and not as alternatives for Net income or any other performance measure presented in accordance with GAAP. Our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.     Three Months Ended June 30,   LTM Ended June 30, (1) (amounts in thousands)   2026   2025   % Change   2026   2025   % Change Net income   $ 33,168     $ 24,789     34 %   $ 95,843     $ 86,050     11 % Depreciation and amortization     2,736       2,866     (5 )     11,271       12,410     (9 ) Income tax expense     12,369       9,324     33       34,399       30,449     13   Interest income     (2,532 )     (3,219 )   (21 )     (13,224 )     (16,790 )   (21 ) Interest expense     7       3     133       82       165     (50 ) EBITDA     45,748       33,763     35       128,371       112,284     14   Severance expenses (2)     —       —     —       6,143       2,930     110   Legal settlement (3)     —       —     —       —       (1,700 )   (100 ) Stock-based compensation     2,653       2,461     8       9,966       8,947     11   Adjusted EBITDA   $ 48,401     $ 36,224     34 %   $ 144,480     $ 122,461     18 % (1) LTM: Last twelve months (2) Severance expenses and other charges in 2026 consisted of voluntary retirement offering and internal restructuring activities and in 2025 consisted of internal restructuring activities. (3) The Company recorded $1.7 million of other income as a result of a legal settlement received. ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE A reconciliation of Adjusted Net Income to Net Income is detailed below. Adjusted Net Income is defined as Net Income plus severance expenses, net of tax plus or minus loss or income from non-routine legal settlements. A reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share is detailed below. Adjusted Diluted Earnings per Share is defined as diluted earnings per share adjusted for severance expenses, net of tax. Adjusted Net Income and Adjusted Diluted Earnings Per Share are considered non-GAAP financial measures (see note above in EBITDA and Adjusted EBITDA for a description of non-GAAP financial measures). The Company believes that Adjusted Net Income and Adjusted Diluted Earnings per Share provide helpful information with respect to the Company's operating performance. When analyzing our operating performance, investors should use Adjusted Net Income and Adjusted Diluted Earnings per Share in addition to, and not as alternatives for Net income and Diluted Earnings per Share or any other performance measure presented in accordance with GAAP. Our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.     Three Months Ended June 30,   Six Months Ended June 30, (amounts in thousands, except per share data)   2026   2025   % Change   2026   2025   % Change Net income   $ 33,168   $ 24,789   34 %   $ 50,391     $ 38,270     32 % Severance expenses (1)     —     —   —       3,060       2,930     4   Tax benefit     —     —   —       (829 )     (799 )   4   Adjusted Net Income     33,168     24,789   34       52,622       40,401     30   Diluted shares     25,339     25,520           25,309       25,860         Diluted Earnings per Share   $ 1.31   $ 0.97   35 %   $ 1.99     $ 1.48     34 % Adjusted Diluted Earnings per Share   $ 1.31   $ 0.97   35 %   $ 2.08     $ 1.56     33 % (1) Severance expenses and other charges in 2026 consisted of voluntary retirement offering and internal restructuring activities and in 2025 consisted of internal restructuring activities.   View source version on businesswire.com: https://www.businesswire.com/news/home/20260729538044/en/

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