0001558370-23-008133 | 10-Q | XBRL Viewer

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets:
Cash and cash equivalents	$ 134,810	$ 122,930
Accounts receivable, net	621,844	610,280
Inventories, net	199,317	208,682
Prepaid expenses and other current assets	18,145	11,900
Total current assets	974,116	953,792
Property and equipment, net	58,372	59,171
Right-of-use assets	6,611	7,558
Goodwill	73,602	73,602
Intangible, net	4,343	4,648
Other assets	1,013	1,055
Total Assets	1,118,057	1,099,826
Current Liabilities:
Accounts payable	239,058	232,638
Accrued payroll	24,304	24,071
Accrued expenses and other liabilities	54,947	53,808
Total current liabilities	318,309	310,517
Deferred income taxes	17,970	17,970
Noncurrent operating lease liabilities	4,623	4,994
Other liabilities	672	170
Total Liabilities	341,574	333,651
Stockholders' Equity:
Common stock	291	291
Additional paid-in capital	127,424	125,784
Retained earnings	698,128	686,037
Treasury stock, at cost	(49,360)	(45,937)
Total Stockholders' Equity	776,483	766,175
Total Liabilities and Stockholders' Equity	$ 1,118,057	$ 1,099,826

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2023	Apr. 27, 2023
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Entity 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		26,277,597
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001050377
Amendment Flag	false

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Shares	Total
Balance at Dec. 31, 2021	$ 290	$ 122,354	$ 605,766	$ (45,937)	$ 682,473
Balance (in shares) at Dec. 31, 2021	29,025			(2,773)
Stock-based compensation expense		1,382			1,382
Restricted stock units vested (in shares)	9
Shares withheld for taxes paid on stock awards		(165)			(165)
Net income			21,792		21,792
Balance at Mar. 31, 2022	$ 290	123,571	627,558	$ (45,937)	705,482
Balance (in shares) at Mar. 31, 2022	29,034			(2,773)
Balance at Dec. 31, 2022	$ 291	125,784	686,037	$ (45,937)	766,175
Balance (in shares) at Dec. 31, 2022	29,123			(2,773)
Stock-based compensation expense		1,853			1,853
Restricted stock units vested (in shares)	10
Shares withheld for taxes paid on stock awards		(213)			(213)
Repurchase of common stock for treasury				$ (3,423)	(3,423)
Repurchase of common stock for treasury (in shares)				(79)
Dividend declaration			(2,107)		(2,107)
Net income			14,198		14,198
Balance at Mar. 31, 2023	$ 291	$ 127,424	$ 698,128	$ (49,360)	$ 776,483
Balance (in shares) at Mar. 31, 2023	29,133			(2,852)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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BASIS OF PRESENTATION (Tables)

3 Months Ended

Mar. 31, 2023

Basis of Presentation

Schedule of restructuring and other charges


	Three Months Ended March 31,
	2023		2022
Employee separations	$	698	$	—
Other charges		199		—
Total restructuring and other charges	$	897	$	—

LEASES - Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) lease	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Leases
Right-of-use assets	$ 6,611	$ 9,201	$ 7,558
Lease liability	$ 7,283
Number of additional operating or financing leases not yet commenced \| lease	0
Lease Cost
Capitalized operating lease cost	$ 1,022	1,022
Short-term lease cost	128	128
Total lease cost	1,150	1,150
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 956	$ 1,000
Weighted-average remaining lease term - Capitalized operating leases (in years)	3 years 5 months 12 days	3 years 9 months 14 days
Weighted-average discount rate - Capitalized operating leases	4.04%	3.92%
Related Parties
Leases
Right-of-use assets	$ 826
Lease liability	826
Lease Cost
Capitalized operating lease cost	313	$ 313
Short-term lease cost	107	107
Total lease cost	420	420
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 313	$ 313
Weighted-average remaining lease term - Capitalized operating leases (in years)	8 months 1 day	1 year 8 months 1 day
Weighted-average discount rate - Capitalized operating leases	3.92%	3.92%
Others
Lease Cost
Capitalized operating lease cost	$ 709	$ 709
Short-term lease cost	21	21
Total lease cost	730	730
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 643	$ 687
Weighted-average remaining lease term - Capitalized operating leases (in years)	3 years 9 months 21 days	4 years 4 months 2 days
Weighted-average discount rate - Capitalized operating leases	4.06%	3.91%

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator:
Net income	$ 14,198	$ 21,792
Denominator:
Denominator for basic earnings per share	26,325	26,255
Dilutive effect of unvested employee stock awards	111	150
Denominator for diluted earnings per share	26,436	26,405
Earnings per share:
Basic	$ 0.54	$ 0.83
Diluted	$ 0.54	$ 0.83
Additional Disclosure
Employee stock awards excluded from computation of diluted earnings per share	0	0

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Computation of basic and diluted earnings per share


	Three Months Ended March 31,
	2023		2022
Numerator:
Net income	$	14,198	$	21,792
Denominator:
Denominator for basic earnings per share		26,325		26,255
Dilutive effect of employee stock awards		111		150
Denominator for diluted earnings per share		26,436		26,405
Earnings per share:
Basic	$	0.54	$	0.83
Diluted	$	0.54	$	0.83

REVENUE (Tables)

3 Months Ended

Mar. 31, 2023

Revenue

Schedule of disaggregation of revenue from contracts with customers


	Three Months Ended March 31, 2023
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	94,919	$	114,318	$	51,774	$	261,011
Desktops		18,762		30,142		14,417		63,321
Software		34,576		39,234		9,917		83,727
Servers/Storage		24,291		12,507		9,987		46,785
Net/Com Products		28,304		20,532		13,320		62,156
Displays and Sound		22,813		26,720		13,202		62,735
Accessories		28,735		47,594		13,473		89,802
Other Hardware/Services		20,714		22,896		14,398		58,008
Total net sales	$	273,114	$	313,943	$	140,488	$	727,545


	Three Months Ended March 31, 2022
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	130,434	$	121,339	$	56,850	$	308,623
Desktops		23,559		44,864		17,988		86,411
Software		34,908		21,010		5,269		61,187
Servers/Storage		22,164		15,371		9,630		47,165
Net/Com Products		22,627		22,191		8,027		52,845
Displays and Sound		32,824		37,079		13,423		83,326
Accessories		32,241		48,007		12,932		93,180
Other Hardware/Services		21,687		25,535		8,385		55,607
Total net sales	$	320,444	$	335,396	$	132,504	$	788,344

Schedule of changes in contract liability balances


	March 31, 2023		December 31, 2022
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,534	$	4,266

Changes in the contract liability balances during the three months ended March 31, 2023 and 2022 are as follows (in thousands):


	2023
Balance at December 31, 2022	$	4,266
Cash received in advance and not recognized as revenue		7,656
Amounts recognized as revenue as performance obligations satisfied		(4,388)
Balance at March 31, 2023	$	7,534

	2022
Balance at December 31, 2021	$	8,628
Cash received in advance and not recognized as revenue		3,870
Amounts recognized as revenue as performance obligations satisfied		(5,455)
Balance at March 31, 2022	$	7,043

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2023

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, 2022, filed with the SEC. The accompanying 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, 2022.

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 months ended March 31, 2023 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2023.

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.

Restructuring and Other Charges

The restructuring and other charges recorded in the first quarter of 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 March 31, 2023.

Restructuring and other charges are presented separately from selling, general and administrative expenses. Costs incurred were as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Employee separations	$	698	$	—
Other charges		199		—
Total restructuring and other charges	$	897	$	—

Included in accrued expenses and other liabilities as of March 31, 2023 was $308 related to unpaid termination benefits.

Recently Issued Financial Accounting Standards

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate, or LIBOR, and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. This ASU is applied prospectively and becomes effective immediately upon the transition from LIBOR. The Company’s secured credit facility agreement references LIBOR, which is expected to be discontinued as a result of reference rate reform. The amendments are effective as of March 12, 2020 through December 31, 2022; however, ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 has extended the effective date through December 31, 2024. The Company is currently evaluating the effect of the adoption of this standard on the Company, but does not believe the adoption will have a material effect on its consolidated financial statements.

LEASES

3 Months Ended

Mar. 31, 2023

Leases

Leases

Note 4–Leases

The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership. Included in the right-of-use, or ROU, asset as of March 31, 2023 was $826 and a corresponding lease liability of $826 associated with related party leases.

As of March 31, 2023, 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 months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	313	$	709	$	1,022	$	313	$	709	$	1,022
Short-term lease cost		107		21		128		107		21		128
Total lease cost	$	420	$	730	$	1,150	$	420	$	730	$	1,150

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	313	$	643	$	956	$	313	$	687	$	1,000

Weighted-average remaining lease term (in years):
Capitalized operating leases		0.67		3.81		3.45		1.67		4.34		3.79

Weighted-average discount rate:
Capitalized operating leases		3.92%		4.06%		4.04%		3.92%		3.91%		3.92%

As of March 31, 2023, 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
2023, excluding the three months ended March 31, 2023	$	958	$	1,495	$	2,453
2024		163		1,697		1,860
2025		163		1,635		1,798
2026		163		952		1,115
2027		1		232		233
Thereafter		—		340		340
	$	1,448	$	6,351	$	7,799

Imputed interest						(516)
Lease liability balance at March 31, 2023					$	7,283

As of March 31, 2023, the ROU asset had a balance of $6,611. The long-term lease liability was $4,623 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $2,660. As of March 31, 2022, the ROU asset had a balance of $9,201. The long-term lease liability was $6,077 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,777.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical)	3 Months Ended
	Mar. 31, 2023 $ / shares
Consolidated Statement of Changes in Stockholders' Equity
Dividend declaration	$ 0.08

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of revenue
Net sales	$ 727,545	$ 788,344
Notebooks/Mobility
Disaggregation of revenue
Net sales	261,011	308,623
Desktops
Disaggregation of revenue
Net sales	63,321	86,411
Software
Disaggregation of revenue
Net sales	83,727	61,187
Servers/Storage
Disaggregation of revenue
Net sales	46,785	47,165
Net/Com Products
Disaggregation of revenue
Net sales	62,156	52,845
Displays and Sound
Disaggregation of revenue
Net sales	62,735	83,326
Accessories
Disaggregation of revenue
Net sales	89,802	93,180
Other Hardware/Services
Disaggregation of revenue
Net sales	58,008	55,607
Business Solutions
Disaggregation of revenue
Net sales	273,114	320,444
Business Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	94,919	130,434
Business Solutions \| Desktops
Disaggregation of revenue
Net sales	18,762	23,559
Business Solutions \| Software
Disaggregation of revenue
Net sales	34,576	34,908
Business Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	24,291	22,164
Business Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	28,304	22,627
Business Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	22,813	32,824
Business Solutions \| Accessories
Disaggregation of revenue
Net sales	28,735	32,241
Business Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	20,714	21,687
Enterprise Solutions
Disaggregation of revenue
Net sales	313,943	335,396
Enterprise Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	114,318	121,339
Enterprise Solutions \| Desktops
Disaggregation of revenue
Net sales	30,142	44,864
Enterprise Solutions \| Software
Disaggregation of revenue
Net sales	39,234	21,010
Enterprise Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	12,507	15,371
Enterprise Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	20,532	22,191
Enterprise Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	26,720	37,079
Enterprise Solutions \| Accessories
Disaggregation of revenue
Net sales	47,594	48,007
Enterprise Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	22,896	25,535
Public Sector Solutions
Disaggregation of revenue
Net sales	140,488	132,504
Public Sector Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	51,774	56,850
Public Sector Solutions \| Desktops
Disaggregation of revenue
Net sales	14,417	17,988
Public Sector Solutions \| Software
Disaggregation of revenue
Net sales	9,917	5,269
Public Sector Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	9,987	9,630
Public Sector Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	13,320	8,027
Public Sector Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	13,202	13,423
Public Sector Solutions \| Accessories
Disaggregation of revenue
Net sales	13,473	12,932
Public Sector Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	$ 14,398	$ 8,385

BANK BORROWINGS

3 Months Ended

Mar. 31, 2023

Bank Borrowings

Bank Borrowings

Note 7–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 one-month LIBOR, plus a spread based on the Company’s funded debt ratio, or in the absence of LIBOR, the prime rate (8.00% at March 31, 2023). The credit facility includes various customary financial ratios and operating covenants, including minimum net worth and maximum funded debt ratio requirements, and default acceleration provisions. The credit facility does not include restrictions on future dividend payments. Funded debt ratio is the ratio of average outstanding advances under the credit facility for a given quarter to consolidated trailing twelve months Adjusted Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges, or Adjusted EBITDA. The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0. Decreases in the Company’s consolidated trailing twelve months Adjusted EBITDA could limit its potential borrowing capacity under the credit facility. As of March 31, 2023, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility.

During the three months ended March 31, 2023, the Company borrowed $59,310 under the credit facility, which was fully repaid prior to March 31, 2023. The Company had no outstanding borrowings under the credit facility as of March 31, 2023 or 2022, and accordingly, the entire $50,000 credit facility was available for borrowings on such date.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Future lease payments over the remaining term of capitalized operating leases
2023, excluding the three months ended March 31, 2023	$ 2,453
2024	1,860
2025	1,798
2026	1,115
2027	233
Thereafter	340
Total	7,799
Imputed interest	(516)
Lease liability balance	7,283
Right-of-use assets	6,611	$ 7,558	$ 9,201
Long-term lease liability	4,623	$ 4,994	6,077
Short-term lease liability	$ 2,660		$ 3,777
Current operating 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
2023, excluding the three months ended March 31, 2023	$ 958
2024	163
2025	163
2026	163
2027	1
Total	1,448
Lease liability balance	826
Right-of-use assets	826
Others
Future lease payments over the remaining term of capitalized operating leases
2023, excluding the three months ended March 31, 2023	1,495
2024	1,697
2025	1,635
2026	952
2027	232
Thereafter	340
Total	$ 6,351

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows provided by Operating Activities:
Net income	$ 14,198	$ 21,792
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	3,073	2,991
Adjustments to credit losses reserve	(99)	567
Stock-based compensation expense	1,853	1,382
Loss on disposal of fixed assets	474	10
Changes in assets and liabilities:
Accounts receivable	(11,465)	(27,177)
Inventories	9,365	(28,046)
Prepaid expenses and other current assets	(6,245)	(4,572)
Other non-current assets	42	32
Accounts payable	5,859	(10,494)
Accrued expenses and other liabilities	2,450	5,230
Net cash provided by (used in) operating activities	19,505	(38,285)
Cash Flows used in Investing Activities:
Purchases of equipment and capitalized software	(1,882)	(2,451)
Net cash used in investing activities	(1,882)	(2,451)
Cash Flows used in Financing Activities:
Proceeds from short-term borrowings	59,310	1,385
Repayment of short-term borrowings	(59,310)	(1,385)
Purchase of common stock for treasury shares	(3,423)
Dividend payments	(2,107)
Payments of payroll taxes on stock-based compensation through shares withheld	(213)	(165)
Net cash used in financing activities	(5,743)	(165)
Increase (decrease) in cash and cash equivalents	11,880	(40,901)
Cash and cash equivalents, beginning of year	122,930	108,310
Cash and cash equivalents, end of period	134,810	67,409
Non-cash Investing and Financing Activities:
Accrued capital expenditures	753	266
Supplemental Cash Flow Information:
Income taxes paid	7,279	$ 287
Interest paid	$ 17

REVENUE

3 Months Ended

Mar. 31, 2023

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 March 31, 2023 and 2022, along with the segment for each category (in thousands).


	Three Months Ended March 31, 2023
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	94,919	$	114,318	$	51,774	$	261,011
Desktops		18,762		30,142		14,417		63,321
Software		34,576		39,234		9,917		83,727
Servers/Storage		24,291		12,507		9,987		46,785
Net/Com Products		28,304		20,532		13,320		62,156
Displays and Sound		22,813		26,720		13,202		62,735
Accessories		28,735		47,594		13,473		89,802
Other Hardware/Services		20,714		22,896		14,398		58,008
Total net sales	$	273,114	$	313,943	$	140,488	$	727,545


	Three Months Ended March 31, 2022
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	130,434	$	121,339	$	56,850	$	308,623
Desktops		23,559		44,864		17,988		86,411
Software		34,908		21,010		5,269		61,187
Servers/Storage		22,164		15,371		9,630		47,165
Net/Com Products		22,627		22,191		8,027		52,845
Displays and Sound		32,824		37,079		13,423		83,326
Accessories		32,241		48,007		12,932		93,180
Other Hardware/Services		21,687		25,535		8,385		55,607
Total net sales	$	320,444	$	335,396	$	132,504	$	788,344

Contract Balances

The following table provides information about contract liabilities from arrangements with customers as of March 31, 2023 and December 31, 2022 (in thousands).


	March 31, 2023		December 31, 2022
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,534	$	4,266

Changes in the contract liability balances during the three months ended March 31, 2023 and 2022 are as follows (in thousands):


	2023
Balance at December 31, 2022	$	4,266
Cash received in advance and not recognized as revenue		7,656
Amounts recognized as revenue as performance obligations satisfied		(4,388)
Balance at March 31, 2023	$	7,534

	2022
Balance at December 31, 2021	$	8,628
Cash received in advance and not recognized as revenue		3,870
Amounts recognized as revenue as performance obligations satisfied		(5,455)
Balance at March 31, 2022	$	7,043

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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+ Details

BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2023

Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates in the Preparation of Financial Statements

Restructuring and other charges

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 March 31,
	2023		2022
Employee separations	$	698	$	—
Other charges		199		—
Total restructuring and other charges	$	897	$	—

Included in accrued expenses and other liabilities as of March 31, 2023 was $308 related to unpaid termination benefits.

Recently Issued Financial Accounting Standards

LEASES (Tables)

3 Months Ended

Mar. 31, 2023

Leases

Schedule of lease cost


	Three Months Ended March 31, 2023						Three Months Ended March 31, 2022
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	313	$	709	$	1,022	$	313	$	709	$	1,022
Short-term lease cost		107		21		128		107		21		128
Total lease cost	$	420	$	730	$	1,150	$	420	$	730	$	1,150

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	313	$	643	$	956	$	313	$	687	$	1,000

Weighted-average remaining lease term (in years):
Capitalized operating leases		0.67		3.81		3.45		1.67		4.34		3.79

Weighted-average discount rate:
Capitalized operating leases		3.92%		4.06%		4.04%		3.92%		3.91%		3.92%

Schedule of future lease payments on capitalized operating leases


For the Years Ended December 31,		Related Parties		Others		Total
2023, excluding the three months ended March 31, 2023	$	958	$	1,495	$	2,453
2024		163		1,697		1,860
2025		163		1,635		1,798
2026		163		952		1,115
2027		1		232		233
Thereafter		—		340		340
	$	1,448	$	6,351	$	7,799

Imputed interest						(516)
Lease liability balance at March 31, 2023					$	7,283

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Consolidated Statements of Income
Net sales	$ 727,545	$ 788,344
Cost of sales	605,249	660,038
Gross profit	122,296	128,306
Selling, general and administrative expenses	103,282	98,172
Restructuring and other charges	897
Income from operations	18,117	30,134
Other income (expense), net	1,286	(3)
Income before taxes	19,403	30,131
Income tax provision	(5,205)	(8,339)
Net income	$ 14,198	$ 21,792
Earnings per common share:
Basic	$ 0.54	$ 0.83
Diluted	$ 0.54	$ 0.83
Shares used in computation of earnings per common share:
Basic	26,325	26,255
Diluted	26,436	26,405

SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) segment	Mar. 31, 2022 USD ($) segment	Dec. 31, 2022 USD ($)
Segment Reporting Information
Number of reportable segments \| segment	3	3
Number of operating segments \| segment	3	3
Net sales:
Net sales	$ 727,545	$ 788,344
Operating income (loss):
Operating income (loss)	18,117	30,134
Other expenses, net	1,286	(3)
Income before taxes	19,403	30,131
Depreciation and amortization:
Depreciation and amortization	3,073	2,991
Total assets:
Total assets	1,118,057	1,100,819	$ 1,099,826
Business Solutions
Net sales:
Net sales	273,114	320,444
Enterprise Solutions
Net sales:
Net sales	313,943	335,396
Public Sector Solutions
Net sales:
Net sales	140,488	132,504
Operating Segments \| Business Solutions
Net sales:
Net sales	273,114	320,444
Operating income (loss):
Operating income (loss)	16,553	20,673
Depreciation and amortization:
Depreciation and amortization	159	167
Total assets:
Total assets	467,444	426,103
Operating Segments \| Enterprise Solutions
Net sales:
Net sales	313,943	335,396
Operating income (loss):
Operating income (loss)	6,522	14,314
Depreciation and amortization:
Depreciation and amortization	424	534
Total assets:
Total assets	661,670	651,905
Operating Segments \| Public Sector Solutions
Net sales:
Net sales	140,488	132,504
Operating income (loss):
Operating income (loss)	29	(1,126)
Depreciation and amortization:
Depreciation and amortization	19	20
Total assets:
Total assets	104,880	94,540
Headquarters/Other
Operating income (loss):
Operating income (loss)	(4,987)	(3,727)
Depreciation and amortization:
Depreciation and amortization	2,471	2,270
Total assets:
Assets net of intercompany balance eliminations	(115,937)	(71,729)
Intersegment Elimination
Total assets:
Total assets	$ (60,176)	$ (50,234)

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2023

Segment Information

Segment information applicable to reportable operating segments


	Three Months Ended
	March 31,		March 31,
	2023		2022
Net sales:
Business Solutions	$	273,114	$	320,444
Enterprise Solutions		313,943		335,396
Public Sector Solutions		140,488		132,504
Total net sales	$	727,545	$	788,344
Operating income (loss):
Business Solutions	$	16,553	$	20,673
Enterprise Solutions		6,522		14,314
Public Sector Solutions		29		(1,126)
Headquarters/Other		(4,987)		(3,727)
Total operating income		18,117		30,134
Other income (expense), net		1,286		(3)
Income before taxes	$	19,403	$	30,131
Selected operating expense:
Depreciation and amortization:
Business Solutions	$	159	$	167
Enterprise Solutions		424		534
Public Sector Solutions		19		20
Headquarters/Other		2,471		2,270
Total depreciation and amortization	$	3,073	$	2,991
Total assets:
Business Solutions	$	467,444	$	426,103
Enterprise Solutions		661,670		651,905
Public Sector Solutions		104,880		94,540
Headquarters/Other		(115,937)		(71,729)
Total assets	$	1,118,057	$	1,100,819

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2023

Segment Information

Segment Information

Note 5–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 Business Solutions segment, which serves primarily small- to medium-sized businesses; the Enterprise Solutions segment, which serves primarily medium-to-large corporations; 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 months ended March 31, 2023 and 2022 is shown below (in thousands):


	Three Months Ended
	March 31,		March 31,
	2023		2022
Net sales:
Business Solutions	$	273,114	$	320,444
Enterprise Solutions		313,943		335,396
Public Sector Solutions		140,488		132,504
Total net sales	$	727,545	$	788,344
Operating income (loss):
Business Solutions	$	16,553	$	20,673
Enterprise Solutions		6,522		14,314
Public Sector Solutions		29		(1,126)
Headquarters/Other		(4,987)		(3,727)
Total operating income		18,117		30,134
Other income (expense), net		1,286		(3)
Income before taxes	$	19,403	$	30,131
Selected operating expense:
Depreciation and amortization:
Business Solutions	$	159	$	167
Enterprise Solutions		424		534
Public Sector Solutions		19		20
Headquarters/Other		2,471		2,270
Total depreciation and amortization	$	3,073	$	2,991
Total assets:
Business Solutions	$	467,444	$	426,103
Enterprise Solutions		661,670		651,905
Public Sector Solutions		104,880		94,540
Headquarters/Other		(115,937)		(71,729)
Total assets	$	1,118,057	$	1,100,819

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, inventories, property and equipment, ROU assets, and intercompany balance, net. As of March 31, 2023 and 2022, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $60,176 and $50,234, 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.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI https://asc.fasb.org/topic&trid=2134510

+ Details

REVENUE - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Change in contract liability
Beginning balance - Contract liability	$ 4,266	$ 8,628
Cash received in advance and not recognized as revenue	7,656	3,870
Amounts recognized as revenue as performance obligations satisfied	(4,388)	(5,455)
Ending balance - Contract liability	7,534	$ 7,043
Accrued expenses and other liabilities
Contract liabilities
Contract liabilities	$ 7,534		$ 4,266

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies

Commitments and Contingencies

Note 6–Commitments and Contingencies

The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. The outcome of such matters is 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.

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Earnings Per Share

Note 3–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 March 31,
	2023		2022
Numerator:
Net income	$	14,198	$	21,792
Denominator:
Denominator for basic earnings per share		26,325		26,255
Dilutive effect of employee stock awards		111		150
Denominator for diluted earnings per share		26,436		26,405
Earnings per share:
Basic	$	0.54	$	0.83
Diluted	$	0.54	$	0.83

For the three months ended March 31, 2023 and 2022, 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.

BANK BORROWINGS (Details) - USD ($) $ in Thousands	3 Months Ended
BANK BORROWINGS (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Subordinated Borrowing
Line of credit, borrowing capacity	$ 50,000
Credit facility, expiration date	Mar. 31, 2025
Line of credit, maximum borrowing capacity	$ 80,000
Proceeds from short-term borrowings	59,310	$ 1,385
Line of credit, outstanding borrowing	0	0
Line of credit, available for borrowing	$ 50,000	$ 50,000
Maximum
Subordinated Borrowing
Debt ratio	2.0
Prime Rate
Subordinated Borrowing
Debt instrument, interest rate	8.00%

BASIS OF PRESENTATION - Restructuring and Other Charges (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Restructuring and other charges
Restructuring and other charges	$ 897
Accrued employee termination benefits	308
Employee separations
Restructuring and other charges
Restructuring and other charges	698
Other charges
Restructuring and other charges
Restructuring and other charges	$ 199