UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):   May 2, 2019

 
Registrant’s telephone number, including area code:   (603) 683-2000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ⃞

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⃞

Item 2.02.  Results of Operations and Financial Condition

          On May 2, 2019, PC Connection, Inc. announced its financial results for the quarter ended March 31, 2019.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  

          The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.  Financial Statements and Exhibits

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

Connection (CNXN) Reports First Quarter 2019 Results

Net Income Increases by 12.6% from Prior Q1

FIRST QUARTER SUMMARY:

• Net income: $12.7 million, up 12.6% y/y
• Gross profit: $99.3 million, up 3.1% y/y
• Record gross margin: 15.7%, compared to 15.4%
• Diluted EPS: $0.48, compared to $0.42 y/y, up 14.3%
• Cash balance: $93.5 million

MERRIMACK, N.H.--(BUSINESS WIRE)--May 2, 2019--Connection (PC Connection, Inc.; NASDAQ: CNXN), a leading technology solutions provider to business, government, and education markets, today announced results for the first quarter ended March 31, 2019. Net sales for the quarter ended March 31, 2019 increased by 1.3% to $632.9 million, compared to $624.9 million for the prior year quarter. Our average daily sales during the quarter increased by 2.9%, compared to the prior year quarter. During the quarter, there was downward pressure on net sales growth, because a greater portion of our software sales were recognized on a net basis. Net income for the first quarter ended March 31, 2019 increased by 12.6% to $12.7 million, or $0.48 per diluted share, compared to net income of $11.3 million, or $0.42 per diluted share for the prior year quarter.

Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense and restructuring and other charges (“Adjusted EBITDA”) totaled $108.1 million for the twelve months ended March 31, 2019, compared to $98.6 million for the twelve months ended March 31, 2018.

Quarterly Performance by Segment:

• Net sales for the Business Solutions segment decreased by 3.9% to $252.9 million in the first quarter of 2019, compared to the prior year quarter. We experienced strong growth in sales of mobility and software products in the quarter. Our software growth was driven by increases in cloud-based and security software sales, which are recognized on a net basis. The recognition of sales on a net basis can result in downward pressure on net sales, but will result in higher gross margins. Gross margin increased by 23 basis points to 17.8% due to increased sales of cloud-based and security software, partially offset by changes in hardware product mix.
• Net sales for the Public Sector Solutions segment decreased slightly to $104.4 million in the first quarter of 2019, compared to the prior year quarter. Sales to the federal government increased by 3.3%, compared to the prior year, while sales to state and local government and educational institutions decreased by 1.7%. Gross margin decreased by 29 basis points to 12.6% primarily due to changes in hardware product mix, partially offset by increases resulting from higher cloud-based and security software sales.
• Net sales for the Enterprise Solutions segment increased by 7.2% to $275.6 million in the first quarter of 2019, compared to the prior year quarter primarily due to continued strong demand by our Enterprise customers. Gross margin increased by 69 basis points to 15.0% primarily due to an increase in sales of cloud-based and security software and improved invoice selling margins.

Quarterly Sales by Product Mix:

• Notebook/mobility sales, the Company’s largest product category, increased by 10% year over year and accounted for 28% of net sales in the first quarter of 2019, compared to 26% of net sales in the prior year quarter. All three selling segments experienced strong year-over-year growth in notebook sales.
• Accessories sales increased by 20% year over year and accounted for 14% of net sales in the first quarter of 2019, compared to 12% of net sales in the prior year quarter. The Enterprise Solutions segment experienced year-over-year growth in accessories sales due to timing of large project rollouts, compared to the prior year quarter.
• Desktop sales increased by 6% year over year and accounted for 12% of net sales in the first quarter of 2019, compared to 11% of net sales in the prior year quarter. The Enterprise Solutions and Public Sector Solutions segments experienced strong year-over-year growth in desktop sales.
• Software sales increased by 3% year over year and accounted for 11% of net sales in the first quarter of 2019 and 2018. The growth in software sales was largely driven by increased sales of cloud-based offerings, security, and maintenance software across all three segments.

Selling, general and administrative (“SG&A”) expenses increased in the first quarter of 2019 to $81.2 million from $80.9 million in the prior year quarter, but decreased 11 basis points as a percentage of net sales.

In addition, the first quarter 2019 results include $0.7 million of restructuring and other related costs associated with severance and other exit costs associated with the closing of an office facility.

Cash and cash equivalents were $93.5 million at March 31, 2019, compared to $91.7 million at December 31, 2018. In January 2019, we paid a $0.32 cent per share special dividend to shareholders, which totaled $8.5 million. During the first quarter of 2019, the Company repurchased 42,537 shares of stock for $1.3 million.

“The Company achieved record gross margin this quarter. We saw strong demand in mobility, software, cloud and security solutions. We are pleased with the growth in our Enterprise segment and in our retail and healthcare vertical markets,” said Tim McGrath, President and Chief Executive Officer. “Our increased productivity and improved execution allowed us to deliver a 12.6% increase in net income,” concluded Mr. McGrath.

Conference Call and Webcast

Connection will host a conference call and live web cast today, May 2, 2019 at 4:30 p.m. ET to discuss its first quarter financial results. To access the conference call (audio only), please dial 877-776-4016 (US) or 973-638-3231 (International). 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

Adjusted EBITDA, Adjusted EPS and Adjusted Net Income are non-GAAP financial measures. This information is included to provide 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 other similarly titled measures of other companies. A reconciliation to the most directly comparable GAAP measure is 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 computer systems overnight from its ISO 9001:2015 certified technical configuration lab at its distribution center in Wilmington, OH. In addition, the Company has over 2,500 technical certifications to ensure 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), (the original business of PC Connection) operating through our PC Connection Sales Corp. subsidiary, is a rapid-response provider of IT products and services serving primarily the small- and medium-sized business sector. It offers more than 300,000 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, operating through our MoreDirect, Inc. subsidiary, provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and access to over 300,000 products and 1,600 vendors through TRAXX™, a proprietary cloud-based eProcurement system. The team’s engineers, software licensing specialists, and project managers help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle.

Connection – Public Sector Solutions (800-800-0019), operating through our GovConnection, Inc. subsidiary, 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.

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"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are based on currently available information, operating plans, and projections about future events and trends. Terms such as "believe," "expect," "intend," "plan," "estimate," "anticipate," "may," "should," "will," or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements include such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to, the impact of changes in market demand and the overall level of economic activity and environment, or in the level of business investment in information technology products, product availability and market acceptance, new products, continuation of key vendor and customer relationships and support programs, the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, fluctuations in operating results and the ability of the Company to manage personnel levels in response to fluctuations in revenue, the ability of the Company to hire and retain qualified sales representatives and other essential personnel, the impact of changes in accounting requirements, and other risks detailed in the Company's filings with the Securities and Exchange Commission, including under the caption "Risk Factors" in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2018. The Company assumes no obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise, except as required by law.

CONTACT:
Tom Baker, 603.683.2505
Tom.Baker@connection.com