Connection (CNXN) Reports Second Quarter 2024 Results
Connection (CNXN) reported strong Q2 2024 results, achieving record net income and earnings per share. Net sales increased 0.4% year-over-year to $736.5 million, while gross profit rose 6.9% to $136.5 million. Net income surged 32.8% to $26.2 million, with diluted EPS reaching $0.99, up from $0.75 in the prior year quarter. The company's gross margin expanded 112 basis points to 18.5%.
Performance varied across segments, with Business Solutions and Enterprise Solutions showing growth, while Public Sector Solutions experienced a decline. The company's product mix saw increases in notebook/mobility, desktop, software, and server/storage sales, offset by decreases in networking and accessories. Connection also declared a quarterly dividend of $0.10 per share.
Connection (CNXN) ha riportato risultati solidi per il secondo trimestre del 2024, raggiungendo un reddito netto record e utili per azione. Le vendite nette sono aumentate dello 0,4% su base annua, raggiungendo 736,5 milioni di dollari, mentre il profitto lordo è cresciuto del 6,9% a 136,5 milioni di dollari. Il reddito netto è balzato del 32,8% a 26,2 milioni di dollari, con un EPS diluito che ha raggiunto 0,99 dollari, in aumento rispetto a 0,75 dollari dello stesso trimestre dell'anno precedente. Il margine lordo dell'azienda è aumentato di 112 punti base, raggiungendo il 18,5%.
La performance è variata tra i segmenti, con le Soluzioni per le Aziende e le Soluzioni per le Imprese che hanno mostrato una crescita, mentre le Soluzioni per il Settore Pubblico hanno subito un calo. Il mix di prodotti dell'azienda ha mostrato aumenti nelle vendite di notebook/mobilità, desktop, software e server/storage, compensati da diminuzioni nelle vendite di reti e accessori. Connection ha anche dichiarato un dividendo trimestrale di 0,10 dollari per azione.
Connection (CNXN) reportó resultados sólidos en el segundo trimestre de 2024, logrando un ingreso neto récord y ganancias por acción. Las ventas netas aumentaron un 0,4% interanual, alcanzando 736,5 millones de dólares, mientras que el beneficio bruto creció un 6,9%, llegando a 136,5 millones de dólares. El ingreso neto se disparó un 32,8% a 26,2 millones de dólares, con un EPS diluido que alcanzó los 0,99 dólares, en comparación con 0,75 dólares en el trimestre del año anterior. El margen bruto de la empresa se amplió en 112 puntos básicos, alcanzando el 18,5%.
El desempeño varió entre segmentos, con Soluciones Empresariales y Soluciones para Empresas mostrando crecimiento, mientras que las Soluciones para el Sector Público experimentaron una disminución. La mezcla de productos de la empresa vio aumentos en las ventas de notebook/movilidad, escritorio, software y servidor/almacenamiento, compensados por disminuciones en redes y accesorios. Connection también declaró un dividendo trimestral de 0,10 dólares por acción.
Connection (CNXN)은 2024년 2분기 강력한 실적을 보고하며 기록적인 순이익과 주당 순이익을 달성했습니다. 순매출은 전년 대비 0.4% 증가하여 7억 3,650만 달러에 이르렀고, 총 이익은 6.9% 증가하여 1억 3,650만 달러에 달했습니다. 순이익은 32.8% 급증하여 2,620만 달러에 달했으며, 희석 EPS는 0.99달러로 이전 연도의 같은 분기에서 0.75달러에서 증가했습니다. 회사의 총 마진은 112베이시스 포인트 증가하여 18.5%에 도달했습니다.
성과는 부문별로 달라졌으며, 비즈니스 솔루션 및 기업 솔루션은 성장을 보였고, 공공 부문 솔루션은 하락세를 겪었습니다. 회사의 제품 믹스는 노트북/모빌리티, 데스크탑, 소프트웨어 및 서버/스토리지 판매에서 증가를 보였고, 네트워크 및 액세서리 판매는 감소했습니다. Connection은 또한 주당 0.10달러의 분기 배당금을 선언했습니다.
Connection (CNXN) a rapporté des résultats solides pour le deuxième trimestre de 2024, atteignant un revenu net record et un bénéfice par action. Les ventes nettes ont augmenté de 0,4 % d'une année sur l'autre, atteignant 736,5 millions de dollars, tandis que le bénéfice brut a crû de 6,9 % pour atteindre 136,5 millions de dollars. Le revenu net a bondi de 32,8 % à 26,2 millions de dollars, et le bénéfice par action dilué a atteint 0,99 dollar, contre 0,75 dollar au trimestre de l'année précédente. La marge brute de l'entreprise s'est élargie de 112 points de base, atteignant 18,5 %.
Les performances ont varié selon les segments, avec les Solutions pour les Entreprises et les Solutions d'Entreprise montrant une croissance, tandis que les Solutions pour le Secteur Public ont connu un déclin. Le mix de produits de l'entreprise a connu des augmentations dans les ventes de notebook/mobilité, de bureau, de logiciel et de serveur/stockage, compensées par des diminutions dans les ventes de réseaux et d'accessoires. Connection a également déclaré un dividende trimestriel de 0,10 dollar par action.
Connection (CNXN) berichtete über starke Ergebnisse im 2. Quartal 2024 und erzielte einen Rekordnettogewinn sowie einen Rekordgewinn pro Aktie. Nettoverkaufszahlen stiegen im Jahresvergleich um 0,4% auf 736,5 Millionen US-Dollar, während der Bruttogewinn um 6,9% auf 136,5 Millionen US-Dollar anstieg. Der Nettogewinn sprang um 32,8% auf 26,2 Millionen US-Dollar, wobei das verwässerte EPS von 0,75 US-Dollar im Vorjahresquartal auf 0,99 US-Dollar anstieg. Die Bruttomarge des Unternehmens erweiterte sich um 112 Basispunkte auf 18,5%.
Die Leistung variierte je nach Segment, wobei die Business Solutions und Enterprise Solutions Wachstum zeigten, während die Public Sector Solutions einen Rückgang verzeichneten. Die Produktmix des Unternehmens verzeichnete Zuwächse im Bereich Notebook/Mobilität, Desktop, Software und Server/Speicher, während die Verkäufe im Bereich Netzwerke und Zubehör zurückgingen. Connection erklärte zudem eine vierteljährliche Dividende von 0,10 US-Dollar pro Aktie.
- Record net income of $26.2 million, up 32.8% year-over-year
- Diluted EPS increased to $0.99 from $0.75 in the prior year quarter
- Gross margin expanded 112 basis points to 18.5%
- Business Solutions segment net sales increased by 6.6%
- Enterprise Solutions segment net sales grew by 4.1%
- Notebook/mobility and desktop sales increased by 7% year-over-year
- Software sales increased by 7% year-over-year
- Servers/storage sales increased by 19% year-over-year
- Cash and cash equivalents increased to $385.8 million from $244.0 million year-over-year
- Public Sector Solutions segment net sales decreased by 14.0%
- Networking sales decreased by 33% year-over-year
- Accessories sales decreased by 6% year-over-year
- SG&A expenses increased to $105.2 million from $101.0 million in the prior year quarter
- SG&A as a percentage of net sales increased to 14.3% from 13.8% in the prior year quarter
Insights
Connection's Q2 2024 results demonstrate a solid performance in a challenging market. The 0.4% year-over-year increase in net sales to
- Gross profit up
6.9% to$136.5 million - Gross margin expanded 112 basis points to
18.5% - Net income surged
32.8% to$26.2 million - Diluted EPS increased from
$0.75 to$0.99
These figures indicate effective cost management and a shift towards higher-margin products or services. The Business Solutions and Enterprise Solutions segments showed growth, while the Public Sector Solutions segment experienced a decline, likely due to budget constraints in government and education sectors.
The company's strong cash position of
However, investors should note the increase in SG&A expenses as a percentage of net sales, which could impact future profitability if not managed carefully. Overall, Connection's ability to grow earnings in a challenging environment for IT solutions providers is commendable and suggests a robust business model.
Connection's Q2 results offer interesting insights into current IT spending trends. The 7% increase in notebook/mobility and desktop sales, now accounting for
However, the 33% decrease in networking sales is concerning and may indicate a shift in enterprise priorities or increased competition in this segment. The
The varying performance across different product categories highlights the importance of a diversified product portfolio in the IT solutions space. Connection's ability to offset declines in some areas with growth in others demonstrates adaptability to changing market demands.
Looking ahead, the company's focus on strategic priorities and adapting to customer needs in a "dynamic and rapidly evolving technology landscape" will be crucial. The IT industry continues to face challenges such as supply chain disruptions, chip shortages and rapid technological changes. Connection's performance suggests they're navigating these challenges relatively well, but continued innovation and agility will be key to maintaining this momentum.
Connection's Q2 results provide valuable insights into the current state of the IT solutions market. The company's performance across different segments reveals interesting trends:
- Business Solutions segment grew by
6.6% , indicating robust demand from private sector businesses. - Public Sector Solutions segment declined by
14.0% , suggesting budget constraints or shifting priorities in government and education sectors. - Enterprise Solutions segment increased by
4.1% , showing steady demand from larger corporations.
These segment-specific results highlight the importance of a diversified customer base in the IT solutions industry. Connection's ability to offset declines in the public sector with growth in other areas demonstrates the resilience of its business model.
The product mix data is equally telling. The strong performance in notebooks/mobility, desktops and servers/storage aligns with broader industry trends towards remote work solutions and data center upgrades. However, the significant decline in networking sales (
Looking ahead, Connection's focus on adapting to the "dynamic and rapidly evolving technology landscape" will be crucial. The company's ability to maintain and expand its gross margins in this competitive environment is commendable and suggests effective strategic execution. However, the increasing SG&A expenses as a percentage of sales will need careful management to ensure long-term profitability.
Record Quarter for Net Income and Earnings per Share
SECOND QUARTER SUMMARY:
-
Net sales:
$736.5 million 0.4% y/y -
Gross profit:
$136.5 million 6.9% y/y -
Gross margin:
18.5% , up 112 basis points y/y -
Net income:
$26.2 million 32.8% y/y -
Diluted EPS:
$0.99 $0.75
“Connection achieved record net income and earnings per share of
Second Quarter of 2024 Results:
Net sales for the quarter ended June 30, 2024 increased by
Performance by Segment:
-
Net sales for the Business Solutions segment increased by
6.6% to$278.2 million $261.0 million 8.1% to$66.3 million $61.4 million 23.8% for the second quarter of 2024.
-
Net sales for the Public Sector Solutions segment decreased by
14.0% to$159.5 million $185.4 million $17.6 million $8.3 million 3.0% to$24.1 million $23.5 million 15.2% for the second quarter of 2024.
-
Net sales for the Enterprise Solutions segment increased by
4.1% to$298.8 million $287.1 million 7.2% to$46.1 million $42.9 million 15.4% for the second quarter of 2024.
Sales by Product Mix:
-
Notebook/mobility and desktop sales increased by
7% year over year and accounted for47% of net sales in the second quarter of 2024, compared to44% of net sales in the second quarter of 2023.
-
Software sales increased by
7% year over year and accounted for9% of net sales in the second quarter of 2024 and 2023.
-
Servers/storage sales increased by
19% year over year and accounted for9% of net sales in the second quarter of 2024, compared to7% of net sales in the second quarter of 2023.
-
Networking sales decreased by
33% year over year and accounted for7% of net sales in the second quarter of 2024, compared to11% of net sales in the second quarter of 2023.
-
Accessories sales decreased by
6% year over year and accounted for11% of net sales in the second quarter of 2024 and 2023.
Selling, general and administrative (“SG&A”) expenses increased in the second quarter of 2024 to
Interest income in the second quarter of 2024 was
Cash and cash equivalents and short-term investments were
Six Months of 2024 Results:
Net sales for the six months ended June 30, 2024 decreased by
Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense and restructuring and other charges (“Adjusted EBITDA”)1 increased
| _________________ |
1 Adjusted EBITDA and Adjusted Diluted Earnings per Share are non-GAAP measures. See page 9 for definitions and reconciliations of these measures. |
Conference Call and Webcast
Connection will host a conference call and live web cast today, July 31, 2024 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, 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
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 2,500 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;
-
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 of 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 fourth-partly shippers negatively impacting our ability to deliver the products we offer to our customers;
-
increases in shipping 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;
-
cyberattacks or the failure to safeguard personal information and our IT systems resulting in liability and harm to our reputation; and
- macroeconomic factors facing the global economy, including disruptions in the capital markets, economic sanctions and economic slowdowns or recessions, rising inflation and changing interest rates reducing the level of investment our customers are willing to make in IT products.
Additional factors include those described in this Annual Report on Form 10-K for the year ended December 31, 2023, 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, |
|||||||||
|
|
2024 |
|
2023 |
|
% Change |
|||||
Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
Net sales (in thousands) |
|
$ |
736,479 |
|
|
$ |
733,547 |
|
|
0 |
% |
Diluted earnings per share |
|
$ |
0.99 |
|
|
$ |
0.75 |
|
|
32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
18.5 |
% |
|
|
17.4 |
% |
|
|
|
Operating margin |
|
|
4.2 |
% |
|
|
3.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turns (1) |
|
|
19 |
|
|
|
14 |
|
|
|
|
Days sales outstanding (2) |
|
|
68 |
|
|
|
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of |
|
|
|
% of |
|
|
|
|
Product Mix: |
|
|
Net Sales |
|
|
|
Net Sales |
|
|
|
|
Notebooks/Mobility |
|
|
35 |
% |
|
|
34 |
% |
|
|
|
Desktops |
|
|
12 |
|
|
|
10 |
|
|
|
|
Accessories |
|
|
11 |
|
|
|
11 |
|
|
|
|
Displays and Sound |
|
|
10 |
|
|
|
9 |
|
|
|
|
Software |
|
|
9 |
|
|
|
9 |
|
|
|
|
Servers/Storage |
|
|
9 |
|
|
|
7 |
|
|
|
|
Net/Com Products |
|
|
7 |
|
|
|
11 |
|
|
|
|
Other Hardware/Services |
|
|
7 |
|
|
9 |
|
|
|
||
Total Net Sales |
|
|
100 |
% |
|
100 |
% |
|
|
||
|
|
|
|
|
|
||||||
Stock Performance Indicators: |
|
|
|
|
|
|
|
|
|
|
|
Actual shares outstanding (in thousands) |
|
|
26,332 |
|
|
|
26,256 |
|
|
|
|
Closing price |
|
$ |
64.20 |
|
|
$ |
45.10 |
|
|
|
|
Market capitalization (in thousands) |
|
$ |
1,690,514 |
|
|
$ |
1,184,146 |
|
|
|
|
Trailing price/earnings ratio |
|
|
19.2 |
|
|
|
15.7 |
|
|
|
|
LTM Net Income (in thousands) |
|
$ |
88,691 |
|
|
$ |
75,924 |
|
|
|
|
LTM Adjusted EBITDA (3) (in thousands) |
|
$ |
125,416 |
|
|
$ |
120,165 |
|
|
|
|
(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 and restructuring and other related charges for the last twelve months. See page 9 for a reconciliation. |
REVENUE AND MARGIN INFORMATION
|
|
For the Three Months Ended June 30, |
||||||||||
|
|
2024 |
|
2023 |
||||||||
|
|
Net |
|
Gross |
|
Net |
|
Gross |
||||
(amounts in thousands) |
|
Sales |
|
Margin |
|
Sales |
|
Margin |
||||
Enterprise Solutions |
|
$ |
298,808 |
|
15.4 |
% |
|
$ |
287,153 |
|
15.0 |
% |
Business Solutions |
|
|
278,198 |
|
23.8 |
|
|
|
261,027 |
|
23.5 |
|
Public Sector Solutions |
|
|
159,473 |
|
15.2 |
|
|
|
185,367 |
|
12.7 |
|
Total |
|
$ |
736,479 |
18.5 |
% |
|
$ |
733,547 |
17.4 |
% |
||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
(amounts in thousands, except per share data) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net sales |
|
$ |
736,479 |
|
|
$ |
733,547 |
|
|
$ |
1,368,504 |
|
|
$ |
1,461,092 |
|
Cost of sales |
|
|
599,937 |
|
|
|
605,770 |
|
|
|
1,113,890 |
|
|
|
1,211,019 |
|
Gross profit |
|
|
136,542 |
|
|
|
127,777 |
|
|
|
254,614 |
|
|
|
250,073 |
|
Selling, general and administrative expenses |
|
|
105,208 |
|
|
|
100,960 |
|
|
|
209,816 |
|
|
|
204,242 |
|
Restructuring and other charges |
|
|
415 |
|
|
|
1,746 |
|
|
|
415 |
|
|
|
2,643 |
|
Income from operations |
|
|
30,919 |
|
|
|
25,071 |
|
|
|
44,383 |
|
|
|
43,188 |
|
Interest income, net |
|
|
4,649 |
|
|
|
1,874 |
|
|
|
9,216 |
|
|
|
3,160 |
|
Income tax provision |
|
|
(9,407 |
) |
|
|
(7,248 |
) |
|
|
(14,284 |
) |
|
|
(12,453 |
) |
Net income |
|
$ |
26,161 |
|
|
$ |
19,697 |
|
|
$ |
39,315 |
|
|
$ |
33,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.99 |
|
|
$ |
0.75 |
|
|
$ |
1.49 |
|
|
$ |
1.29 |
|
Diluted |
|
$ |
0.99 |
|
|
$ |
0.75 |
|
|
$ |
1.48 |
|
|
$ |
1.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares used in the computation of earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
26,348 |
|
|
|
26,256 |
|
|
|
26,355 |
|
|
|
26,291 |
|
Diluted |
|
|
26,520 |
|
|
|
26,365 |
|
|
|
26,522 |
|
|
|
26,400 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30, |
|
December 31, |
||||
(amounts in thousands) |
|
2024 |
|
2023 |
||||
ASSETS |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
128,213 |
|
|
$ |
144,954 |
|
Short-term investments |
|
|
257,590 |
|
|
|
152,232 |
|
Accounts receivable, net |
|
|
598,826 |
|
|
|
606,834 |
|
Inventories, net |
|
|
136,613 |
|
|
|
124,179 |
|
Income taxes receivable |
|
|
9,281 |
|
|
|
4,348 |
|
Prepaid expenses and other current assets |
|
|
16,982 |
|
|
|
16,092 |
|
Total current assets |
|
|
1,147,505 |
|
|
|
1,048,639 |
|
Property and equipment, net |
|
|
54,376 |
|
|
|
56,658 |
|
Right-of-use assets, net |
|
|
3,917 |
|
|
|
4,340 |
|
Goodwill |
|
|
73,602 |
|
|
|
73,602 |
|
Intangibles assets, net |
|
|
2,819 |
|
|
|
3,428 |
|
Other assets |
|
|
1,266 |
|
|
|
1,714 |
|
Total Assets |
|
$ |
1,283,485 |
|
|
$ |
1,188,381 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
317,111 |
|
|
$ |
263,682 |
|
Accrued payroll |
|
|
23,004 |
|
|
|
20,440 |
|
Accrued expenses and other liabilities |
|
|
48,527 |
|
|
|
43,843 |
|
Total current liabilities |
|
|
388,642 |
|
|
|
327,965 |
|
Deferred income taxes |
|
|
17,418 |
|
|
|
15,844 |
|
Operating lease liability |
|
|
2,497 |
|
|
|
3,181 |
|
Other liabilities |
|
|
— |
|
|
|
624 |
|
Total Liabilities |
|
|
408,557 |
|
|
|
347,614 |
|
Stockholders’ Equity: |
|
|
|
|
|
|
||
Common stock |
|
|
293 |
|
|
|
293 |
|
Additional paid-in capital |
|
|
134,967 |
|
|
|
130,878 |
|
Retained earnings |
|
|
794,942 |
|
|
|
760,898 |
|
Accumulated other comprehensive (loss) income |
|
|
(103 |
) |
|
|
81 |
|
Treasury stock at cost |
|
|
(55,171 |
) |
|
|
(51,383 |
) |
Total Stockholders’ Equity |
|
|
874,928 |
|
|
|
840,767 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
1,283,485 |
|
|
$ |
1,188,381 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
(amounts in thousands) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Cash Flows provided by Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
26,161 |
|
|
$ |
19,697 |
|
|
$ |
39,315 |
|
|
$ |
33,895 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
3,273 |
|
|
|
3,094 |
|
|
|
6,539 |
|
|
|
6,167 |
|
Adjustments to credit losses reserve |
|
|
141 |
|
|
|
1,346 |
|
|
|
410 |
|
|
|
1,247 |
|
Stock-based compensation expense |
|
|
2,248 |
|
|
|
1,783 |
|
|
|
4,197 |
|
|
|
3,636 |
|
Deferred income taxes |
|
|
1,623 |
|
|
|
— |
|
|
|
1,623 |
|
|
|
— |
|
Amortization of discount on short-term investments |
|
|
(3,269 |
) |
|
|
— |
|
|
|
(5,593 |
) |
|
|
— |
|
Loss on disposal of fixed assets |
|
|
15 |
|
|
|
1 |
|
|
|
36 |
|
|
|
475 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
|
(71,708 |
) |
|
|
27,835 |
|
|
|
7,598 |
|
|
|
16,370 |
|
Inventories |
|
|
(12,713 |
) |
|
|
39,583 |
|
|
|
(12,434 |
) |
|
|
48,948 |
|
Prepaid expenses, income tax receivable, and other current assets |
|
|
(6,019 |
) |
|
|
(7,408 |
) |
|
|
(5,823 |
) |
|
|
(13,653 |
) |
Other non-current assets |
|
|
168 |
|
|
|
98 |
|
|
|
448 |
|
|
|
140 |
|
Accounts payable |
|
|
98,299 |
|
|
|
38,725 |
|
|
|
53,172 |
|
|
|
44,584 |
|
Accrued expenses and other liabilities |
|
|
172 |
|
|
(8,814 |
) |
|
|
6,188 |
|
|
(6,364 |
) |
||
Net cash provided by operating activities |
|
|
38,391 |
|
|
115,940 |
|
|
|
95,676 |
|
|
135,445 |
|
||
Cash Flows used in Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchases of short-term investments |
|
|
(103,279 |
) |
|
|
— |
|
|
|
(203,278 |
) |
|
|
— |
|
Maturities of short-term investments |
|
|
53,280 |
|
|
|
— |
|
|
|
103,280 |
|
|
|
— |
|
Purchases of property and equipment |
|
|
(1,819 |
) |
|
|
(2,978 |
) |
|
|
(3,427 |
) |
|
|
(4,860 |
) |
Net cash used in investing activities |
|
|
(51,818 |
) |
|
(2,978 |
) |
|
|
(103,425 |
) |
|
(4,860 |
) |
||
Cash Flows used in Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from short-term borrowings |
|
|
2,211 |
|
|
|
8,585 |
|
|
|
10,560 |
|
|
|
67,895 |
|
Repayment of short-term borrowings |
|
|
(2,211 |
) |
|
|
(8,585 |
) |
|
|
(10,560 |
) |
|
|
(67,895 |
) |
Purchase of common stock for treasury shares |
|
|
(3,427 |
) |
|
|
(1,969 |
) |
|
|
(3,613 |
) |
|
|
(5,392 |
) |
Dividend payments |
|
|
(2,635 |
) |
|
|
(2,099 |
) |
|
|
(5,271 |
) |
|
|
(4,206 |
) |
Issuance of stock under Employee Stock Purchase Plan |
|
|
537 |
|
|
|
537 |
|
|
|
537 |
|
|
|
537 |
|
Payment of payroll taxes on stock-based compensation through shares withheld |
|
|
(414 |
) |
|
|
(258 |
) |
|
|
(645 |
) |
|
|
(471 |
) |
Net cash used in financing activities |
|
|
(5,939 |
) |
|
(3,789 |
) |
|
|
(8,992 |
) |
|
(9,532 |
) |
||
(Decrease) increase in cash and cash equivalents |
|
|
(19,366 |
) |
|
|
109,173 |
|
|
|
(16,741 |
) |
|
|
121,053 |
|
Cash and cash equivalents, beginning of period |
|
|
147,579 |
|
|
134,810 |
|
|
|
144,954 |
|
|
122,930 |
|
||
Cash and cash equivalents, end of period |
|
$ |
128,213 |
|
$ |
243,983 |
|
|
$ |
128,213 |
|
$ |
243,983 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash Investing and Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued purchases of property and equipment |
|
$ |
347 |
|
|
$ |
205 |
|
|
$ |
347 |
|
|
$ |
205 |
|
Accrued purchase of common stock for treasury shares |
|
$ |
211 |
|
|
$ |
— |
|
|
$ |
211 |
|
|
$ |
— |
|
Accrued excise tax on treasury purchases |
|
$ |
18 |
|
|
$ |
54 |
|
|
$ |
18 |
|
|
$ |
54 |
|
Supplemental Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income taxes paid |
|
$ |
17,311 |
|
|
$ |
20,131 |
|
|
$ |
17,946 |
|
|
$ |
27,410 |
|
Interest paid |
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
18 |
|
EBITDA AND ADJUSTED EBITDA
A reconciliation from Net Income to EBITDA and Adjusted EBITDA is detailed below. Adjusted EBITDA is defined as EBITDA (defined as earnings before interest, taxes, depreciation and amortization) adjusted for restructuring and other charges, and stock-based compensation. 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 similar titled measures of other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended June 30, |
|
LTM Ended June 30, (1) |
||||||||||||||||||
(amounts in thousands) |
|
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Net income |
|
$ |
26,161 |
|
|
$ |
19,697 |
|
|
33 |
% |
|
$ |
88,691 |
|
|
$ |
75,924 |
|
|
17 |
% |
Depreciation and amortization |
|
|
3,273 |
|
|
|
3,094 |
|
|
6 |
|
|
|
13,026 |
|
|
|
12,165 |
|
|
7 |
|
Income tax expense |
|
|
9,407 |
|
|
|
7,248 |
|
|
30 |
|
|
|
31,674 |
|
|
|
27,143 |
|
|
17 |
|
Interest income |
|
|
(4,656 |
) |
|
|
(1,876 |
) |
|
148 |
|
|
|
(16,031 |
) |
|
|
(4,258 |
) |
|
276 |
|
Interest expense |
|
|
7 |
|
|
|
2 |
|
|
250 |
|
|
|
14 |
|
|
|
27 |
|
|
(48 |
) |
EBITDA |
|
|
34,192 |
|
|
|
28,165 |
|
|
21 |
|
|
|
117,374 |
|
|
|
111,001 |
|
|
6 |
|
Restructuring and other charges (2) |
|
|
415 |
|
|
|
1,746 |
|
|
(76 |
) |
|
|
459 |
|
|
|
2,643 |
|
|
(83 |
) |
Stock-based compensation |
|
|
2,248 |
|
|
|
1,783 |
|
|
26 |
|
|
|
7,583 |
|
|
|
6,521 |
|
|
16 |
|
Adjusted EBITDA |
|
$ |
36,855 |
|
|
$ |
31,694 |
|
|
16 |
% |
|
$ |
125,416 |
|
|
$ |
120,165 |
|
|
4 |
% |
(1) |
LTM: Last twelve months |
|
(2) |
Restructuring and other charges in 2024 and 2023 consisted of severance and other charges related to internal restructuring activities. |
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
A reconciliation from Net Income to Adjusted Net Income is detailed below. Adjusted Net Income is defined as Net Income plus restructuring and other charges, net of tax. A reconciliation from Diluted Earnings per Share to Adjusted Diluted Earnings per Share is detailed below. Adjusted Diluted Earnings per Share is defined diluted earnings per share adjusted for restructuring and other charges, 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 similar titled measures of other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||||
(amounts in thousands, except per share data) |
|
2024 |
|
2023 |
|
% Change |
|
2024 |
|
2023 |
|
% Change |
||||||||||
Net income |
|
$ |
26,161 |
|
|
$ |
19,697 |
|
|
33 |
% |
|
$ |
39,315 |
|
|
$ |
33,895 |
|
|
16 |
% |
Restructuring and other charges (1) |
|
|
415 |
|
|
|
1,746 |
|
|
(76 |
) |
|
|
415 |
|
|
|
2,643 |
|
|
(84 |
) |
Tax benefit |
|
|
(110 |
) |
|
|
(470 |
) |
|
(77 |
) |
|
|
(111 |
) |
|
|
(710 |
) |
|
(84 |
) |
Adjusted Net Income |
|
|
26,466 |
|
|
|
20,973 |
|
|
26 |
|
|
|
39,619 |
|
|
|
35,828 |
|
|
11 |
|
Diluted shares |
|
|
26,520 |
|
|
|
26,365 |
|
|
|
|
|
26,522 |
|
|
|
26,400 |
|
|
|
||
Diluted Earnings per Share |
|
$ |
0.99 |
|
|
$ |
0.75 |
|
|
32 |
% |
|
$ |
1.48 |
|
|
$ |
1.28 |
|
|
15 |
% |
Adjusted Diluted Earnings per Share |
|
$ |
1.00 |
|
|
$ |
0.80 |
|
|
25 |
% |
|
$ |
1.49 |
|
|
$ |
1.36 |
|
|
10 |
% |
(1) |
Restructuring and other charges in 2024 and 2023 consisted of severance and other charges related to internal restructuring activities. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240731492024/en/
Investor Relations Contact:
Thomas Baker, 603.683.2505
Senior Vice President, CFO, and Treasurer
tom@connection.com
Source: Connection
FAQ
What was Connection's (CNXN) net income for Q2 2024?
How did Connection's (CNXN) diluted EPS change in Q2 2024 compared to the previous year?
What was the performance of Connection's (CNXN) Business Solutions segment in Q2 2024?
How did Connection's (CNXN) gross margin change in Q2 2024?
What dividend did Connection (CNXN) declare for Q2 2024?
