Connection (CNXN) Reports Fourth Quarter and Full Year 2025 Results

February 4, 2026

FOURTH QUARTER SUMMARY:

  • Net sales: $702.9 million, down 0.8% y/y
  • Gross billings: $1.1 billion, up 2.9%1
  • Gross profit: $135.6 million, up 4.5% y/y
  • Gross margin: 19.3%, up 100 basis points y/y
  • Net income: $20.7 million, flat y/y
  • Diluted EPS: $0.82, compared to $0.78 y/y
  • Adjusted Diluted EPS: $0.91, compared to $0.782

FULL YEAR SUMMARY:

  • Net sales: $2.9 billion, up 2.5% y/y
  • Gross billings: $4.1 billion, up 2.7%1
  • Gross profit: $539.3 million, up 3.8% y/y
  • Gross margin: 18.8%, up 20 basis points y/y
  • Net income: $83.7 million, down 3.9% y/y
  • Diluted EPS: $3.27, compared to $3.29 y/y
  • Adjusted Diluted EPS: $3.44, compared to $3.252

MERRIMACK, N.H.--(BUSINESS WIRE)--Feb. 4, 2026-- Connection (PC Connection, Inc.; NASDAQ: CNXN), a leading information technology solutions provider to business, government, healthcare and education markets, today announced results for the fourth quarter and year ended December 31, 2025. 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 March 6, 2026, to shareholders of record on February 17, 2026. The Board of Directors also approved a $50.0 million increase to Connection’s existing share repurchase program, bringing the total available to $81.2 million for future repurchases.

“In the fourth quarter, Connection delivered record gross profit in both our Enterprise and Business Solutions segments, reflecting strong execution as our customers modernize for an AI-first IT environment,” said Timothy McGrath, President and Chief Executive Officer. McGrath continued, “I believe that we have the right team and strategy to continue to drive profitable growth and enhance long-term shareholder value.”

Fourth Quarter of 2025 Results:

Net sales for the quarter ended December 31, 2025 decreased by 0.8%, year over year. Gross billings increased by 2.9% to $1.1 billion, compared to $1.0 billion in the fourth quarter of 20241. Gross profit increased by 4.5% to $135.6 million, compared to $129.8 million for the fourth quarter of 2024, and gross margin increased 100 basis points to 19.3%, compared to the prior year quarter. Net income remained flat at $20.7 million, or $0.82 per diluted share, compared $0.78 per diluted share, for the fourth quarter of 2024. Adjusted Diluted Earnings per Share2 was $0.91 for the quarter ended December 31, 2025, compared to $0.78 per share for the quarter ended December 31, 2024.

Performance by Segment:

  • Net sales for the Business Solutions segment increased by 4.2% to $273.5 million in the fourth quarter of 2025, compared to $262.4 million in the prior year quarter. Gross billings increased by 4.7% to $430.3 million, compared to $411.1 million in the prior year quarter1. Gross profit increased by 11.4% to $69.8 million, compared to $62.6 million in the prior year quarter. Gross margin increased by 160 basis points to 25.5% for the fourth quarter of 2025.
  • Net sales for the Public Sector Solutions segment decreased by 36.8% to $90.8 million in the fourth quarter of 2025, compared to $143.7 million in the prior year quarter. Gross billings decreased by 23.7% to $170.7 million, compared to $223.8 million in the prior year quarter1. Gross profit decreased by 20.5% to $17.6 million, compared to $22.2 million in the prior year quarter. Gross margin increased by 400 basis points to a record 19.4% for the fourth quarter of 2025.
  • Net sales for the Enterprise Solutions segment increased by 11.9% to $338.7 million in the fourth quarter of 2025, compared to $302.7 million in the prior year quarter. Gross billings increased by 16.1% to $457.8 million, compared to $394.2 million in the prior year quarter1. Gross profit increased by 7.1% to $48.2 million, compared to $45.0 million in the prior year quarter. Gross margin decreased by 70 basis points to 14.2% for the fourth quarter of 2025.

Sales by Product Mix:

  • Notebook/mobility and desktop sales decreased by 4% year over year and accounted for 45% of net sales in the fourth quarter of 2025, compared to 46% of net sales in the fourth quarter of 2024.
  • Software sales increased by 24% year over year and accounted for 12% of net sales in the fourth quarter of 2025, compared to 9% of net sales in the fourth quarter of 2024.
  • Servers/storage sales decreased by 14% year over year and accounted for 7% of net sales in the fourth quarter of 2025, compared to 8% of net sales in the fourth quarter of 2024.
  • Networking sales increased by 2% year over year and accounted for 8% of net sales in the fourth quarter of both 2025 and 2024.
  • Accessories sales decreased by 7% year over year and accounted for 11% of net sales in the fourth quarter of 2025, compared to 12% of net sales in the fourth quarter of 2024.

Selling, general and administrative (“SG&A”) expenses increased in the fourth quarter of 2025 by 1.7% to $108.9 million from $107.1 million in the prior year quarter. SG&A as a percentage of net sales increased to 15.5%, compared to 15.1% in the prior year quarter. The increase in SG&A was driven by an increase in variable compensation due to higher levels of gross profit in the quarter.

In addition, the fourth quarter of 2025 results include $3.1 million of severance expenses related to internal cost reduction initiatives.

Interest income in the fourth quarter of 2025 was $3.6 million, compared to $4.8 million in the fourth quarter of 2024.

Cash and cash equivalents and short-term investments were $406.7 million as of December 31, 2025, compared to $442.6 million as of December 31, 2024. During the fourth quarter of 2025, the Company repurchased 179,235 shares of stock at an aggregate purchase price of $10.7 million.

Full Year 2025 Results:

Net sales for the year ended December 31, 2025 increased by 2.5%, compared to the year ended December 31, 2024. Gross billings increased by 2.7% to $4.1 billion, compared to $4.0 billion in the prior year1. Gross profit increased 3.8% while gross margin expanded by 20 basis points to 18.8% year over year. Net income for the year ended December 31, 2025 decreased by 3.9% to $83.7 million, or $3.27 per diluted share, compared to net income of $87.1 million, or $3.29 per diluted share, for the year ended December 31, 2024. Adjusted Diluted Earnings per Share2 increased to $3.44 per share for the year ended December 31, 2025, compared to $3.25 per share for the year ended December 31, 2024.

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 6% to $126.4 million for the year ended December 31, 2025, compared to $118.9 million for the year ended December 31, 2024.

Conference Call and Webcast

Connection will host a conference call and live web cast today, February 4, 2026 at 4:30 p.m. EST to discuss its fourth 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.

___________________________________

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.

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 by words such as “believe,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “may,” “should,” “will,” or similar statements or variations of such terms, 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, 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;
  • 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, 2024, 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 December 31,

 

 

2025

 

2024

 

% Change

Operating Data:

 

 

 

 

 

 

 

 

 

 

 

Net sales (in thousands)

 

$

702,939

 

 

$

708,897

 

 

(1

)%

Diluted earnings per share

 

$

0.82

 

 

$

0.78

 

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

19.3

%

 

 

18.3

%

 

 

 

Operating margin

 

 

3.4

%

 

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventory turns (1)

 

 

18

 

 

 

23

 

 

 

 

Days sales outstanding (2)

 

 

76

 

 

 

72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of

 

 

 

% of

 

 

 

 

Product Mix:

 

 

Net Sales

 

 

 

Net Sales

 

 

 

 

Notebooks/Mobility

 

 

34

%

 

 

36

%

 

 

 

Software

 

 

12

 

 

 

9

 

 

 

 

Accessories

 

 

11

 

 

 

12

 

 

 

 

Desktops

 

 

11

 

 

 

10

 

 

 

 

Displays and Sound

 

 

10

 

 

 

8

 

 

 

 

Net/Com Products

 

 

8

 

 

 

8

 

 

 

 

Servers/Storage

 

 

7

 

 

 

8

 

 

 

 

Other Hardware/Services

 

 

7

 

 

9

 

 

 

Total Net Sales

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

Stock Performance Indicators:

 

 

 

 

 

 

 

 

 

 

 

Actual shares outstanding (in thousands)

 

 

25,221

 

 

 

26,300

 

 

 

 

Closing price

 

$

57.76

 

 

$

69.27

 

 

 

 

Market capitalization (in thousands)

 

$

1,456,765

 

 

$

1,821,801

 

 

 

 

Trailing price/earnings ratio

 

 

17.7

 

 

 

21.1

 

 

 

 

LTM Net Income (in thousands)

 

$

83,722

 

 

$

87,095

 

 

 

 

LTM Adjusted EBITDA (3) (in thousands)

 

$

126,417

 

 

$

118,936

 

 

 

 

(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 December 31,

 

 

2025

 

2024

 

 

Net

 

Gross

 

Net

 

Gross

(amounts in thousands)

 

Sales

 

Margin

 

Sales

 

Margin

Enterprise Solutions

 

$

338,662

 

14.2

%

 

$

302,711

 

14.9

%

Business Solutions

 

 

273,460

 

25.5

 

 

 

262,440

 

23.9

 

Public Sector Solutions

 

 

90,817

 

19.4

 

 

 

143,746

 

15.4

 

Total

 

$

702,939

19.3

%

 

$

708,897

18.3

%

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

(amounts in thousands, except per share data)

 

2025

 

2024

 

2025

 

2024

Net sales

 

$

702,939

 

 

$

708,897

 

 

$

2,872,746

 

 

$

2,802,118

 

Cost of sales

 

 

567,331

 

 

 

579,123

 

 

 

2,333,416

 

 

 

2,282,324

 

Gross profit

 

 

135,608

 

 

 

129,774

 

 

 

539,330

 

 

 

519,794

 

Selling, general and administrative expenses

 

 

108,928

 

 

 

107,136

 

 

 

434,035

 

 

 

422,317

 

Severance expenses and other charges

 

 

3,083

 

 

 

—

 

 

 

6,013

 

 

 

415

 

Income from operations

 

 

23,597

 

 

 

22,638

 

 

 

99,282

 

 

 

97,062

 

Interest income, net

 

 

3,565

 

 

 

4,672

 

 

 

14,370

 

 

 

18,725

 

Other income

 

 

—

 

 

 

—

 

 

 

76

 

 

 

1,700

 

Income before taxes

 

 

27,162

 

 

 

27,310

 

 

 

113,728

 

 

 

117,487

 

Income tax provision

 

 

(6,450

)

 

 

(6,589

)

 

 

(30,006

)

 

 

(30,392

)

Net income

 

$

20,712

 

 

$

20,721

 

 

$

83,722

 

 

$

87,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.82

 

 

$

0.79

 

 

$

3.28

 

 

$

3.31

 

Diluted

 

$

0.82

 

 

$

0.78

 

 

$

3.27

 

 

$

3.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in the computation of earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

25,220

 

 

 

26,289

 

 

 

25,511

 

 

 

26,322

 

Diluted

 

 

25,330

 

 

 

26,484

 

 

 

25,633

 

 

 

26,508

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

(amounts in thousands)

 

2025

 

2024

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

193,221

 

 

$

178,318

 

Short-term investments

 

 

213,457

 

 

 

264,295

 

Accounts receivable, net

 

 

648,020

 

 

 

611,433

 

Inventories, net

 

 

143,567

 

 

 

95,054

 

Prepaid expenses and other current assets

 

 

22,607

 

 

 

17,750

 

Total current assets

 

 

1,220,872

 

 

 

1,166,850

 

Property and equipment, net

 

 

46,912

 

 

 

52,520

 

Right-of-use assets

 

 

1,569

 

 

 

3,077

 

Goodwill

 

 

73,602

 

 

 

73,602

 

Intangibles, net

 

 

989

 

 

 

2,209

 

Other assets

 

 

6,981

 

 

 

1,096

 

Total Assets

 

$

1,350,925

 

 

$

1,299,354

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

338,202

 

 

$

300,242

 

Accrued payroll

 

 

30,939

 

 

 

23,330

 

Accrued expenses and other liabilities

 

 

51,251

 

 

 

47,633

 

Total current liabilities

 

 

420,392

 

 

 

371,205

 

Deferred income taxes

 

 

19,905

 

 

 

15,091

 

Non-current operating lease liabilities

 

 

498

 

 

 

1,552

 

Other liabilities

 

 

—

 

 

 

516

 

Total Liabilities

 

 

440,795

 

 

 

388,364

 

Stockholders’ Equity:

 

 

 

 

 

 

Common stock

 

 

295

 

 

 

294

 

Additional paid-in capital

 

 

144,608

 

 

 

137,036

 

Retained earnings

 

 

905,890

 

 

 

837,466

 

Accumulated other comprehensive income

 

 

78

 

 

 

174

 

Treasury stock at cost

 

 

(140,741

)

 

 

(63,980

)

Total Stockholders’ Equity

 

 

910,130

 

 

 

910,990

 

Total Liabilities and Stockholders’ Equity

 

$

1,350,925

 

 

$

1,299,354

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

(amounts in thousands)

 

2025

 

2024

 

2025

 

2024

Cash Flows provided by Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20,712

 

 

$

20,721

 

 

$

83,722

 

 

$

87,095

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,850

 

 

 

3,166

 

 

 

11,703

 

 

 

12,984

 

Adjustments to credit losses reserve

 

 

628

 

 

 

1,084

 

 

 

1,861

 

 

 

1,914

 

Stock-based compensation expense

 

 

2,241

 

 

 

2,279

 

 

 

9,343

 

 

 

8,475

 

Deferred income taxes

 

 

1,655

 

 

 

(3,211

)

 

 

4,840

 

 

 

(777

)

Amortization of discount on short-term investments, net

 

 

2,181

 

 

 

167

 

 

 

569

 

 

 

(4,235

)

Gain on sale of short-term investments

 

 

—

 

 

 

—

 

 

 

(76

)

 

 

—

 

Loss on disposal of fixed assets

 

 

14

 

 

 

9

 

 

 

44

 

 

 

58

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(31,944

)

 

 

(27,441

)

 

 

(38,448

)

 

 

(6,513

)

Inventories

 

 

(8,549

)

 

 

18,637

 

 

 

(48,513

)

 

 

29,125

 

Prepaid expenses and other current assets

 

 

554

 

 

 

6,095

 

 

 

(4,300

)

 

 

2,690

 

Other non-current assets

 

 

(284

)

 

 

92

 

 

 

(4,087

)

 

 

618

 

Accounts payable

 

 

26,170

 

 

 

7,309

 

 

 

38,075

 

 

 

36,450

 

Accrued expenses and other liabilities

 

 

11,190

 

 

(3,659

)

 

 

10,705

 

 

5,984

 

Net cash provided by operating activities

 

 

27,418

 

 

25,248

 

 

 

65,438

 

 

173,868

 

Cash Flows (used in) provided by Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(108,565

)

 

 

(103,242

)

 

 

(264,139

)

 

 

(358,317

)

Proceeds from sale of short-term investments

 

 

—

 

 

 

—

 

 

 

108,763

 

 

 

—

 

Maturities of short-term investments

 

 

104,271

 

 

 

99,999

 

 

 

205,599

 

 

 

250,606

 

Purchases of property and equipment

 

 

(2,188

)

 

 

(2,360

)

 

 

(7,389

)

 

 

(7,575

)

Net cash (used in) provided by investing activities

 

 

(6,482

)

 

(5,603

)

 

 

42,834

 

 

(115,286

)

Cash Flows used in Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from short-term borrowings

 

 

—

 

 

 

847

 

 

 

732

 

 

 

26,051

 

Repayment of short-term borrowings

 

 

—

 

 

 

(847

)

 

 

(732

)

 

 

(26,051

)

Purchase of treasury shares

 

 

(10,735

)

 

 

(4,643

)

 

 

(76,265

)

 

 

(12,375

)

Payments for excise tax on treasury purchases

 

 

—

 

 

 

—

 

 

 

(36

)

 

 

—

 

Dividend payments

 

 

(3,779

)

 

 

(2,627

)

 

 

(15,298

)

 

 

(10,527

)

Issuance of stock under Employee Stock Purchase Plan

 

 

615

 

 

 

571

 

 

 

1,234

 

 

 

1,108

 

Payment of payroll taxes on stock-based compensation through shares withheld

 

 

(1,661

)

 

 

(2,139

)

 

 

(3,004

)

 

 

(3,424

)

Net cash used in financing activities

 

 

(15,560

)

 

(8,838

)

 

 

(93,369

)

 

(25,218

)

Increase in cash and cash equivalents

 

 

5,376

 

 

 

10,807

 

 

 

14,903

 

 

 

33,364

 

Cash and cash equivalents, beginning of year

 

 

187,845

 

 

167,511

 

 

 

178,318

 

 

144,954

 

Cash and cash equivalents, end of year

 

$

193,221

 

$

178,318

 

 

$

193,221

 

$

178,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Accrued purchases of property and equipment

 

$

85

 

 

$

200

 

 

$

85

 

 

$

200

 

Accrued purchase of treasury shares

 

$

58

 

 

$

240

 

 

$

58

 

 

$

240

 

Accrued excise tax on treasury purchases

 

$

678

 

 

$

36

 

 

$

678

 

 

$

36

 

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 December 31,

 

LTM Ended December 31, (1)

(amounts in thousands)

 

2025

 

2024

 

% Change

 

2025

 

2024

 

% Change

Net income

 

$

20,712

 

 

$

20,721

 

 

(0

)%

 

$

83,722

 

 

$

87,095

 

 

(4

)%

Depreciation and amortization

 

 

2,850

 

 

 

3,166

 

 

(10

)

 

 

11,703

 

 

 

12,984

 

 

(10

)

Income tax expense

 

 

6,450

 

 

 

6,589

 

 

(2

)

 

 

30,006

 

 

 

30,392

 

 

(1

)

Interest income

 

 

(3,591

)

 

 

(4,779

)

 

(25

)

 

 

(14,451

)

 

 

(18,891

)

 

(24

)

Interest expense

 

 

26

 

 

 

107

 

 

(76

)

 

 

81

 

 

 

166

 

 

(51

)

EBITDA

 

 

26,447

 

 

 

25,804

 

 

2

 

 

 

111,061

 

 

 

111,746

 

 

(1

)

Severance expenses and other charges (2)

 

 

3,083

 

 

 

—

 

 

100

 

 

 

6,013

 

 

 

415

 

 

1,349

 

Legal settlement (3)

 

 

—

 

 

 

—

 

 

—

 

 

 

—

 

 

 

(1,700

)

 

(100

)

Stock-based compensation

 

 

2,241

 

 

 

2,279

 

 

(2

)

 

 

9,343

 

 

 

8,475

 

 

10

 

Adjusted EBITDA

 

$

31,771

 

 

$

28,083

 

 

13

%

 

$

126,417

 

 

$

118,936

 

 

6

%

(1)

LTM: Last twelve months

(2)

Severance expenses and other charges in 2025 consisted of voluntary retirement offering and internal restructuring activities and 2024 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 December 31,

 

Year Ended December 31,

(amounts in thousands, except per share data)

 

2025

 

 

2024

 

% Change

 

2025

 

 

2024

 

 

% Change

Net income

 

$

20,712

 

 

$

20,721

 

(0

)%

 

$

83,722

 

 

$

87,095

 

 

(4

)%

Severance expenses and other charges (1)

 

 

3,083

 

 

 

—

 

100

 

 

 

6,013

 

 

 

415

 

 

1,349

 

Legal settlement (2)

 

 

—

 

 

 

—

 

—

 

 

 

—

 

 

 

(1,700

)

 

(100

)

Tax benefit

 

 

(732

)

 

 

—

 

100

 

 

 

(1,586

)

 

 

332

 

 

(578

)

Adjusted Net Income

 

$

23,063

 

 

$

20,721

 

11

%

 

$

88,149

 

 

$

86,142

 

 

2

%

Diluted shares

 

 

25,330

 

 

 

26,484

 

 

 

 

25,633

 

 

 

26,508

 

 

 

Diluted Earnings per Share

 

$

0.82

 

 

$

0.78

 

5

%

 

$

3.27

 

 

$

3.29

 

 

(1

)%

Adjusted Diluted Earnings per Share

 

$

0.91

 

 

$

0.78

 

16

%

 

$

3.44

 

 

$

3.25

 

 

6

%

(1)

Severance expenses and other charges in 2025 consisted of voluntary retirement offering and internal restructuring activities and 2024 consisted of internal restructuring activities.

(2)

The Company recorded $1.7 million of other income as a result of a legal settlement received.

 

Investor Relations Contact:
Thomas Baker, 603.683.2505
Senior Vice President, CFO, and Treasurer
tom@connection.com

Source: PC Connection, Inc.