Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2024

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

For the transition period from to

Commission file number: 0-23827

PC CONNECTION, INC.

(Exact name of registrant as specified in its charter)


Delaware	02-0513618
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)


730 Milford Road
Merrimack, New Hampshire	03054
(Address of principal executive offices)	(Zip Code)


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

Former name, former address and former fiscal year, if changed since last report: N/A

Securities registered pursuant to Section 12(b) of the Act:

C
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	CNXN	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


	Large accelerated filer ☐		Accelerated filer ☑
	Non-accelerated filer ☐		Smaller reporting company ☐
			Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of the issuer’s common stock as of July 24, 2024 was 26,293,202.

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PC CONNECTION, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


	PART I FINANCIAL INFORMATION

		Page
ITEM 1.	Unaudited Condensed Consolidated Financial Statements:

	Condensed Consolidated Balance Sheets–June 30, 2024 and December 31, 2023	1

	Condensed Consolidated Statements of Income–Three and Six Months Ended June 30, 2024 and 2023	2

	Condensed Consolidated Statements of Other Comprehensive Income–Three and Six Months Ended June 30, 2024 and 2023	3

	Condensed Consolidated Statements of Stockholders’ Equity–Three and Six Months Ended June 30, 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows–Six Months Ended June 30, 2024 and 2023	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27

ITEM 4.	Controls and Procedures	28




	PART II OTHER INFORMATION

ITEM 1.	Legal Proceedings	29

ITEM 1A.	Risk Factors	29

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29

ITEM 5.	Other Information	29

ITEM 6.	Exhibits	30

SIGNATURES		31

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PC CONNECTION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands)


	June 30,		December 31,
	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		3,917		4,340
Goodwill		73,602		73,602
Intangibles, 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
Noncurrent operating lease liabilities		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

See notes to unaudited condensed consolidated financial statements.

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PC CONNECTION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(amounts in thousands, except per share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	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 before taxes		35,568		26,945		53,599		46,348
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 computation of earnings per common share:
Basic		26,348		26,256		26,355		26,291
Diluted		26,520		26,365		26,522		26,400

See notes to unaudited condensed consolidated financial statements.

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PC CONNECTION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

(Unaudited)

(amounts in thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net income	$	26,161	$	19,697	$	39,315	$	33,895
Other comprehensive loss:
Unrealized losses on available-for-sale investments, net of tax of $11 and $49 for the three and six months ended June 30, 2024, respectively, and net of tax of $0 for the three and six months ended June 30, 2023, respectively		(41)		—		(184)		—
Comprehensive income	$	26,120	$	19,697	$	39,131	$	33,895

See notes to unaudited condensed consolidated financial statements.

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PC CONNECTION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(amounts in thousands)


	Three Months Ended June 30, 2024
	Common Stock			Additional		Retained		Accumulated Other		Treasury Shares
	Shares	Amount		Paid-In Capital		Earnings		Comprehensive (Loss) Income		Shares	Amount		Total
Balance - March 31, 2024	29,271	$	293	$	132,596	$	771,416	$	(62)	(2,905)	$	(51,571)	$	852,672
Stock-based compensation expense	—		—		2,248		—		—	—		—		2,248
Restricted stock units vested	14		—		—		—		—	—		—		—
Shares withheld for taxes paid on stock awards	—		—		(414)		—		—	—		—		(414)
Repurchase of common stock for treasury	—		—		—		—		—	(57)		(3,600)		(3,600)
Issuance of common stock under Employee Stock Purchase Plan	9		—		537		—		—	—		—		537
Dividend declaration ($0.10 per share)	—		—		—		(2,635)		—	—		—		(2,635)
Net income	—		—		—		26,161		—	—		—		26,161
Other comprehensive loss, net of tax	—		—		—		—		(41)	—		—		(41)
Balance - June 30, 2024	29,294	$	293	$	134,967	$	794,942	$	(103)	(2,962)	$	(55,171)	$	874,928

	Six Months Ended June 30, 2024
	Common Stock			Additional		Retained		Accumulated Other		Treasury Shares
	Shares	Amount		Paid-In Capital		Earnings		Comprehensive (Loss) Income		Shares	Amount		Total
Balance - December 31, 2023	29,262	$	293	$	130,878	$	760,898	$	81	(2,902)	$	(51,383)	$	840,767
Stock-based compensation expense	—		—		4,197		—		—	—		—		4,197
Restricted stock units vested	23		—		—		—		—	—		—		—
Shares withheld for taxes paid on stock awards	—		—		(645)		—		—	—		—		(645)
Repurchase of common stock for treasury	—		—		—		—		—	(60)		(3,788)		(3,788)
Issuance of common stock under Employee Stock Purchase Plan	9		—		537		—		—	—		—		537
Dividend declaration ($0.10 per share)	—		—		—		(5,271)		—	—		—		(5,271)
Net income	—		—		—		39,315		—	—		—		39,315
Other comprehensive loss, net of tax	—		—		—		—		(184)	—		—		(184)
Balance - June 30, 2024	29,294	$	293	$	134,967	$	794,942	$	(103)	(2,962)	$	(55,171)	$	874,928

	Three Months Ended June 30, 2023
	Common Stock			Additional		Retained		Accumulated Other		Treasury Shares
	Shares	Amount		Paid-In Capital		Earnings		Comprehensive (Loss) Income		Shares	Amount		Total
Balance - March 31, 2023	29,133	$	291	$	127,424	$	698,128	$	—	(2,852)	$	(49,360)	$	776,483
Stock-based compensation expense	—		—		1,783		—		—	—		—		1,783
Restricted stock units vested	12		—		—		—		—	—		—		—
Shares withheld for taxes paid on stock awards	—		—		(258)		—		—	—		—		(258)
Repurchase of common stock for treasury	—		—		—		—		—	(50)		(2,023)		(2,023)
Issuance of common stock under Employee Stock Purchase Plan	13		—		537		—		—	—		—		537
Dividend declaration ($0.08 per share)	—		—		—		(2,099)		—	—		—		(2,099)
Net income	—		—		—		19,697		—	—		—		19,697
Balance - June 30, 2023	29,158	$	291	$	129,486	$	715,726	$	—	(2,902)	$	(51,383)	$	794,120

	Six Months Ended June 30, 2023
	Common Stock			Additional		Retained		Accumulated Other		Treasury Shares
	Shares	Amount		Paid-In Capital		Earnings		Comprehensive (Loss) Income		Shares	Amount		Total
Balance - December 31, 2022	29,123	$	291	$	125,784	$	686,037	$	—	(2,773)	$	(45,937)	$	766,175
Stock-based compensation expense	—		—		3,636		—		—	—		—		3,636
Restricted stock units vested	22		—		—		—		—	—		—		—
Shares withheld for taxes paid on stock awards	—		—		(471)		—		—	—		—		(471)
Repurchase of common stock for treasury	—		—		—		—		—	(129)		(5,446)		(5,446)
Issuance of common stock under Employee Stock Purchase Plan	13		—		537		—		—	—		—		537
Dividend declaration ($0.08 per share)	—		—		—		(4,206)		—	—		—		(4,206)
Net income	—		—		—		33,895		—	—		—		33,895
Balance - June 30, 2023	29,158	$	291	$	129,486	$	715,726	$	—	(2,902)	$	(51,383)	$	794,120

See notes to unaudited condensed consolidated financial statements.

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PC CONNECTION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(amounts in thousands)


	Six Months Ended
	June 30,
	2024		2023
Cash Flows provided by Operating Activities:
Net income	$	39,315	$	33,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,539		6,167
Adjustments to credit losses reserve		410		1,247
Stock-based compensation expense		4,197		3,636
Deferred income taxes		1,623		—
Amortization of discount on short-term investments		(5,593)		—
Loss on disposal of fixed assets		36		475
Changes in assets and liabilities:
Accounts receivable		7,598		16,370
Inventories		(12,434)		48,948
Prepaid expenses, income tax receivable, and other current assets		(5,823)		(13,653)
Other non-current assets		448		140
Accounts payable		53,172		44,584
Accrued expenses and other liabilities		6,188		(6,364)
Net cash provided by operating activities		95,676		135,445
Cash Flows used in Investing Activities:
Purchases of short-term investments		(203,278)		—
Maturities of short-term investments		103,280		—
Purchases of property and equipment		(3,427)		(4,860)
Net cash used in investing activities		(103,425)		(4,860)
Cash Flows used in Financing Activities:
Proceeds from short-term borrowings		10,560		67,895
Repayment of short-term borrowings		(10,560)		(67,895)
Purchase of common stock for treasury shares		(3,613)		(5,392)
Dividend payments		(5,271)		(4,206)
Issuance of stock under Employee Stock Purchase Plan		537		537
Payment of payroll taxes on stock-based compensation through shares withheld		(645)		(471)
Net cash used in financing activities		(8,992)		(9,532)
(Decrease) increase in cash and cash equivalents		(16,741)		121,053
Cash and cash equivalents, beginning of period		144,954		122,930
Cash and cash equivalents, end of period	$	128,213	$	243,983

Non-cash Investing and Financing Activities:
Accrued purchases of property and equipment	$	347	$	205
Accrued purchase of common stock for treasury shares	$	211	$	—
Accrued excise tax on treasury purchases	$	18	$	54
Supplemental Cash Flow Information:
Income taxes paid	$	17,946	$	27,410
Interest paid	$	2	$	18

See notes to unaudited condensed consolidated financial statements.

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PC CONNECTION, INC. AND SUBSIDIARIES

PART I―FINANCIAL INFORMATION

Item 1―Financial Statements

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except per share data)

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, 2023, filed with the SEC. The accompanying unaudited 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, 2023.

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 and six months ended June 30, 2024 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2024.

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.

Cash and Cash Equivalents and Investments

The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. All of the Company’s investments are classified as available-for-sale. The Company classifies investments as short-term when their remaining contractual maturities are one year or less from the balance sheet date, and as long-term when the investment has a remaining contractual maturity of more than one year from the balance sheet date. The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive (loss) income on the condensed consolidated balance sheets.

Included in interest income, net on the condensed consolidated statements of income is interest income on cash equivalents and short-term investments of $4,655 and $9,220 for the three and six months ended June 30, 2024, respectively, and $1,874 and $3,182 for the three and six months ended June 30, 2023, respectively.

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Treasury Stock, at Cost

The total repurchases for the six months ended June 30, 2024 and 2023 were recorded as treasury stock of $3,788 and $5,446, respectively. Such costs reflect the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022.

Restructuring and Other Charges

The restructuring and other charges recorded for the three and six months ended June 30, 2024 and 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 June 30, 2024.

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Employee separations	$	415	$	1,701	$	415	$	2,399
Other charges		—		45		—		244
Total restructuring and other charges	$	415	$	1,746	$	415	$	2,643

Included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2024 was $130 related to unpaid termination benefits.

Recently Issued Financial Accounting Standards

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance is intended to improve segment reporting disclosures on both an interim and annual basis, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2024, and for interim reporting periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance is intended to improve the transparency of income tax disclosures through, among other things, enhancement of the disclosure requirements within the rate reconciliation, as well as increased income tax disaggregation disclosures. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statement disclosures.

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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 June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Three Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	89,802	$	97,841	$	69,816	$	257,459
Desktops		52,680		20,105		12,792		85,577
Software		21,628		37,775		9,571		68,974
Servers/Storage		15,691		34,056		13,640		63,387
Net/Com Products		19,107		19,845		14,312		53,264
Displays and Sound		37,265		19,981		16,745		73,991
Accessories		38,645		28,663		11,470		78,778
Other Hardware/Services		23,990		19,932		11,127		55,049
Total net sales	$	298,808	$	278,198	$	159,473	$	736,479


	Three Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	87,590	$	88,081	$	74,231	$	249,902
Desktops		33,572		19,011		17,971		70,554
Software		17,561		33,828		13,059		64,448
Servers/Storage		18,705		22,605		11,959		53,269
Net/Com Products		28,727		28,584		22,233		79,544
Displays and Sound		27,322		23,654		16,785		67,761
Accessories		41,095		26,506		16,488		84,089
Other Hardware/Services		32,581		18,758		12,641		63,980
Total net sales	$	287,153	$	261,027	$	185,367	$	733,547

The following tables represent a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Six Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	180,033	$	189,997	$	108,698	$	478,728
Desktops		90,717		38,223		21,539		150,479
Software		48,748		68,427		15,121		132,296
Servers/Storage		28,058		55,667		22,146		105,871
Net/Com Products		39,069		41,690		19,917		100,676
Displays and Sound		68,529		41,733		27,348		137,610
Accessories		80,177		59,036		19,066		158,279
Other Hardware/Services		46,136		39,294		19,135		104,565
Total net sales	$	581,467	$	534,067	$	252,970	$	1,368,504

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	Six Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	201,908	$	183,000	$	126,005	$	510,913
Desktops		63,714		37,773		32,388		133,875
Software		56,795		68,404		22,976		148,175
Servers/Storage		31,212		46,896		21,946		100,054
Net/Com Products		49,259		56,888		35,553		141,700
Displays and Sound		54,042		46,467		29,987		130,496
Accessories		88,689		55,241		29,961		173,891
Other Hardware/Services		55,477		39,472		27,039		121,988
Total net sales	$	601,096	$	534,141	$	325,855	$	1,461,092

Contract Balances

The following table provides information about contract liabilities from arrangements with customers as of June 30, 2024 and December 31, 2023 (in thousands).


	June 30, 2024		December 31, 2023
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,100	$	4,206

Changes in the contract liability balances during the six months ended June 30, 2024 and 2023 are as follows (in thousands):


	2024
Balance at December 31, 2023	$	4,206
Cash received in advance and not recognized as revenue		9,769
Amounts recognized as revenue as performance obligations satisfied		(6,875)
Balance at June 30, 2024	$	7,100

	2023
Balance at December 31, 2022	$	4,266
Cash received in advance and not recognized as revenue		11,980
Amounts recognized as revenue as performance obligations satisfied		(9,683)
Balance at June 30, 2023	$	6,563

Note 3–Fair Value Measurements

Cash equivalents and short-term investments consist of the following (in thousands):


	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	108,117	$	—	$	—	$	108,117
Short-term investments:
U.S. Government treasury securities		257,720		11		(141)		257,590
Total	$	365,837	$	11	$	(141)	$	365,707

	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	129,123	$	—	$	—	$	129,123
Short-term investments:
U.S. Government treasury securities		152,129		103		—		152,232
Total	$	281,252	$	103	$	—	$	281,355

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Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with maturities of one year or greater from the date of purchase are generally classified as long-term investments. All short-term investments had stated maturity dates of less than one year. The Company has recorded the securities at fair value on its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive income. The amount of realized gains and losses reclassified into earnings and the related adjustments to deferred taxes are based on the specific identification of the securities sold or securities that reached maturity date.

Fair Value

The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows:

●

Level 1 inputs: Quoted prices for identical assets or liabilities in active markets;

●

Level 2 inputs: Observable inputs other than those described as Level 1; and

●

Level 3 inputs: Unobservable inputs that are supported by little or no market activities and are based on significant assumptions and estimates.

As of June 30, 2024 and December 31, 2023, the fair value of the Company’s investments were all measured using level 1 inputs.

Note 4–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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	26,161	$	19,697	$	39,315	$	33,895
Denominator:
Denominator for basic earnings per share		26,348		26,256		26,355		26,291
Dilutive effect of employee stock awards		172		109		167		109
Denominator for diluted earnings per share		26,520		26,365		26,522		26,400
Earnings per share:
Basic	$	0.99	$	0.75	$	1.49	$	1.29
Diluted	$	0.99	$	0.75	$	1.48	$	1.28

For the three and six months ended June 30, 2024 and 2023, 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.

Note 5–Leases

The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership.

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As of June 30, 2024, 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 and six months ended June 30, 2024 and 2023 (dollars in thousands):


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	—	$	485	$	485	$	—	$	944	$	944
Short-term lease cost		421		140		561		841		281		1,122
Total lease cost	$	421	$	625	$	1,046	$	841	$	1,225	$	2,066

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	—	$	532	$	532	$	—	$	977	$	977

Weighted-average remaining lease term (in years):
Capitalized operating leases								—		2.43		2.43

Weighted-average discount rate:
Capitalized operating leases								3.92%		4.28%		4.21%

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	314	$	590	$	904	$	627	$	1,299	$	1,926
Short-term lease cost		107		115		222		214		136		350
Total lease cost	$	421	$	705	$	1,126	$	841	$	1,435	$	2,276

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	314	$	602	$	916	$	627	$	1,245	$	1,872

Weighted-average remaining lease term (in years):
Capitalized operating leases								0.42		3.59		3.33

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

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As of June 30, 2024, 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
2024, excluding the six months ended June 30, 2024	$	713	$	394	$	1,107
2025		163		1,817		1,980
2026		163		1,042		1,205
2027		1		236		237
2028		—		161		161
Thereafter		—		—		—
	$	1,040	$	3,650	$	4,690

Imputed interest						(231)
Lease liability balance at June 30, 2024					$	4,459

As of June 30, 2024, the right-of-use, or ROU, asset had a balance of $3,917. The long-term lease liability was $2,497 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $1,962. As of December 31, 2023, the ROU asset had a balance of $4,340. The long-term lease liability was $3,181 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $1,733.

Note 6–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 Enterprise Solutions segment, which serves primarily medium-to-large corporations; the Business Solutions segment, which serves primarily small- to medium-sized businesses; 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.

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Net sales presented below exclude inter-segment product revenues. Segment information applicable to the Company’s operating segments for the three and six months ended June 30, 2024 and 2023 is shown below (in thousands):


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Net sales:
Enterprise Solutions	$	298,808	$	287,153	$	581,467	$	601,096
Business Solutions		278,198		261,027		534,067		534,141
Public Sector Solutions		159,473		185,367		252,970		325,855
Total net sales	$	736,479	$	733,547	$	1,368,504	$	1,461,092
Operating income (loss):
Enterprise Solutions	$	10,230	$	7,511	$	16,077	$	14,033
Business Solutions		22,229		18,831		38,018		35,384
Public Sector Solutions		2,714		1,650		(2,636)		1,679
Headquarters/Other		(4,254)		(2,921)		(7,076)		(7,908)
Total operating income		30,919		25,071		44,383		43,188
Interest income, net		4,649		1,874		9,216		3,160
Income before taxes	$	35,568	$	26,945	$	53,599	$	46,348
Selected operating expense:
Depreciation and amortization:
Enterprise Solutions	$	221	$	423	$	426	$	847
Business Solutions		147		158		310		317
Public Sector Solutions		23		20		46		39
Headquarters/Other		2,882		2,493		5,757		4,964
Total depreciation and amortization	$	3,273	$	3,094	$	6,539	$	6,167
Total assets:
Enterprise Solutions					$	729,450	$	678,104
Business Solutions						537,655		472,566
Public Sector Solutions						107,382		102,652
Headquarters/Other						(91,002)		(89,047)
Total assets					$	1,283,485	$	1,164,275

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, short-term investments, inventories, property and equipment, ROU assets, and intercompany balance, net. As of June 30, 2024 and 2023, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $59,751 and $55,432, 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.

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Note 7–Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss), which is included as a component of stockholders’ equity, is comprised of unrealized gains (losses) on short-term investments, net of tax. The changes in accumulated other comprehensive income (loss) were as follows (in thousands):


	Six Months Ended
	June 30, 2024
Balance - December 31, 2023	$	81
Other comprehensive income (loss) before reclassifications, net of tax		(158)
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		26
Net other comprehensive income (loss)		(184)
Balance - June 30, 2024	$	(103)

	Six Months Ended
	June 30, 2023
Balance - December 31, 2022	$	—
Other comprehensive income (loss) before reclassifications, net of tax		—
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		—
Net other comprehensive income (loss)		—
Balance - June 30, 2023	$	—

Note 8–Commitments and Contingencies

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

Note 9–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 daily Bloomberg Short-Term Bank Yield Index, or BSBY Rate, plus a spread based on the Company’s funded debt ratio, or in the absence of BSBY Rate, the prime rate (8.50% at June 30, 2024). 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 June 30, 2024, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility.

Cash receipts are automatically applied against any outstanding borrowings. During the six months ended June 30, 2024 and 2023, the Company borrowed incremental amounts that were each repaid in full. These borrowings for the six months ended June 30, 2024 and 2023 totaled $10,560 and $67,895, respectively; however, at no time were the outstanding borrowings greater than the $50,000 limit under the credit facility. The Company had no outstanding borrowings under the credit facility as of June 30, 2024 or 2023, and accordingly, the entire $50,000 credit facility was available for borrowings on such date.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “would,” “should,” “expects,” “plans,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “anticipates,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. 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 analyses of current market conditions and trends, management 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, or IT, 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;

●

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 our 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 caption “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. 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.

Unless the context otherwise requires, we use the terms “Connection”, the “Company”, “we”, “us”, and “our” in this Quarterly Report on Form 10-Q to refer to PC Connection, Inc. and its subsidiaries.

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OVERVIEW

We are a Fortune 1000 Global Solutions Provider that simplifies the IT customer experience, guiding the connection between people and technology. Our dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services. We provide a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories that we purchase from manufacturers, distributors, and other suppliers. Our Technology Solutions Organization, or TSO, and state-of-the-art Technology Integration and Distribution Center with ISO 9001:2015 certified technical configuration lab offer end-to-end services related to the design, configuration, and implementation of IT solutions. Our team also provides a comprehensive portfolio of managed services and professional services. These services are performed by our personnel and by third-party providers. Our GlobalServe offering ensures worldwide coverage for our multinational customers, delivering global procurement solutions through our network of in-country suppliers in over 150 countries.

The “Connection®” brand includes Connection Enterprise Solutions, Connection Business Solutions, and Connection Public Sector Solutions, which provide IT solutions and services to enterprise, small- to medium-sized businesses, and public sector markets.

Financial results for each of our segments are included in the financial statements attached hereto. We generate sales through (i) outbound inside sales and field sales contacts by sales representatives focused on the business, educational, healthcare, retail, manufacturing, and government markets, (ii) our websites, and (iii) direct responses from customers responding to our advertising media. We offer a broad selection of over 460,000 products at competitive prices, including products from vendors like Apple, Cisco, Dell Inc., Hewlett-Packard Inc., Hewlett-Packard Enterprise, Intel, Lenovo, Microsoft Corporation, and VMware, and we partner with more than 2,500 suppliers. We are able to leverage our state-of-the art logistic capabilities to rapidly ship product to customers.

As a value-added reseller in the IT supply chain, we do not manufacture IT hardware or software products. We are dependent on our suppliers—manufacturers and distributors that historically have only sold to resellers rather than directly to end users. However, certain manufacturers have, on multiple occasions, sold or attempted to sell directly to our customers, and in some cases, have restricted our ability to sell their products directly to certain customers, thereby attempting to and, in some cases successfully, eliminate our role. We believe that the success of these direct sales efforts by manufacturers will depend on their ability to meet our customers’ ongoing demands and provide solutions to meet their needs. We believe more of our customers are seeking out comprehensive and integrated IT solutions, rather than the ability to acquire specific IT products on a one-off basis. Our advantage is our ability to be product-neutral and provide a broader combination of products, services, and advice tailored to our customers’ individual needs. By providing customers with customized solutions from a variety of manufacturers, we believe we can mitigate the negative impact of continued direct sales initiatives from individual manufacturers. Through the formation of our TSO, we are able to provide customers complete IT solutions, from identifying their needs, to designing, developing, and managing the integration of products and services to implement their IT projects. Such service offerings carry higher margins than traditional product sales. Additionally, the technical certifications of our service engineers permit us to offer higher-end, more complex products that generally carry higher gross margins. We expect these service offerings and technical certifications to continue to play a role in sales generation and gross margin improvements in this competitive environment.

The primary challenges we continue to face in effectively managing our business are (1) increasing our product and service revenues while at the same time improving our gross margin in all three segments, (2) recruiting, retaining, and improving the productivity of our sales and technical support personnel, and (3) effectively controlling our selling, general and administrative, or SG&A, expenses while making major investments in our IT systems and solution selling personnel, especially in relation to changing revenue levels.

To support future growth, we have invested and expect to continue to invest in our IT solutions business, which requires the addition of highly skilled service engineers. Although we expect to realize the ultimate benefit of higher-margin service revenues under this multi-year initiative, we believe that our cost of services will increase as we add additional service engineers. If our service revenues do not grow enough to offset the cost of these headcount additions, our operating results may be negatively impacted.

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Market conditions and technology advances significantly affect the demand for our products and services. Virtual delivery of software products and advanced Internet technology providing customers enhanced functionality have substantially increased customer expectations, requiring us to invest on an ongoing basis in our own IT infrastructure to meet these new demands.

Our investments in IT infrastructure are designed to enable us to operate more efficiently and provide our customers enhanced functionality.

RESULTS OF OPERATIONS

The following table sets forth information derived from our statements of income expressed as a percentage of net sales for the periods indicated (dollars in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net sales	$	736.5		$	733.5		$	1,368.5		$	1,461.1
Gross margin		18.5	%		17.4	%		18.6	%		17.1	%
Selling, general and administrative expenses		14.3	%		13.8	%		15.3	%		14.0	%
Income from operations		4.2	%		3.4	%		3.2	%		3.0	%

Net sales of $736.5 million for the second quarter of 2024 reflected an increase of $3.0 million, or 0.4% compared to the second quarter of 2023. The increase was primarily driven by increases in net sales of desktops, servers/storage, notebooks/mobility, displays and sound, and software of $15.0 million, $10.1 million, $7.6 million, $6.2 million, and $4.5 million, respectively, as shown in the table in Note 2 “Revenue” in the Notes to our Unaudited Condensed Consolidated Financial Statements. These increases were partially offset by decreases in net sales of net/com products, other hardware/services, and accessories of $26.3 million, $8.9 million, and $5.3 million, respectively. Gross profit for the second quarter of 2024 increased year-over-year by $8.7 million, or 6.9%, to $136.5 million as illustrated in the table and the discussion beginning on page 19 of this Quarterly Report on Form 10-Q. Gross margin increased to 18.5% from 17.4% a year ago. The increase in gross margin was primarily driven by changes in customer mix resulting in improved invoice margins, most notably in the notebooks/mobility and desktops product categories. SG&A expenses increased year-over-year by $4.2 million, or 4.2%, to $105.2 million. SG&A expenses as a percentage of net sales increased to 14.3% compared to 13.8% a year ago. The increase in SG&A expenses as a percentage of net sales is primarily due to an increase in personnel costs as shown in the table on page 18 of this Quarterly Report on Form 10-Q. Operating income for the second quarter of 2024 increased year-over-year both in dollars and as a percentage of net sales by $5.8 million and 80 basis points, respectively, primarily as a result of the increase in gross profit partially offset by the increase in SG&A expenses as discussed above.

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Net Sales Distribution

The following table sets forth our percentage of net sales by segment and product mix for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating Segment
Enterprise Solutions	40	%	39	%	43	%	41	%
Business Solutions	38		36		39		37
Public Sector Solutions	22		25		18		22
Total	100	%	100	%	100	%	100	%

Product Mix
Notebooks/Mobility	35	%	34	%	35	%	35	%
Desktops	12		10		11		9
Accessories	11		11		11		12
Displays and Sound	10		9		10		9
Software	9		9		10		10
Servers/Storage	9		7		8		7
Net/Com Products	7		11		7		10
Other Hardware/Services	7		9		8		8
Total	100	%	100	%	100	%	100	%

Gross Profit Margin

The following table summarizes our gross margin, as a percentage of net sales, for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating Segment
Enterprise Solutions	15.4	%	15.0	%	15.3	%	14.1	%
Business Solutions	23.8		23.5		23.7		22.7
Public Sector Solutions	15.2		12.7		15.5		13.4
Total Company	18.5	%	17.4	%	18.6	%	17.1	%

Operating Expenses

The following table reflects our SG&A expenses for the periods indicated (dollars in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Personnel costs	$	81.1		$	76.8		$	159.6		$	156.0
Advertising		5.2			5.2			12.6			11.8
Service contracts/subscriptions		5.7			5.3			11.7			10.4
Professional fees		3.1			2.9			6.5			6.7
Depreciation and amortization		3.2			3.1			6.5			6.2
Facilities operations		1.9			2.0			3.7			4.2
Credit card fees		1.7			1.7			3.3			3.2
Other		3.3			4.0			5.9			5.7
Total SG&A expense	$	105.2		$	101.0		$	209.8		$	204.2
As a percentage of net sales		14.3	%		13.8	%		15.3	%		14.0	%

Restructuring and Other Charges

During the three and six months ended June 30, 2024 and 2023, we undertook actions to lower our cost structure. In connection with these initiatives, we incurred restructuring and other charges of $0.4 million for each of the three and six

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months ended June 30, 2024 compared to restructuring and other charges of $1.7 million and $2.6 million for the three and six months ended June 30, 2023, respectively, which were primarily related to an involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits. The Company is currently evaluating additional restructuring activities for the third quarter of 2024 and beyond.

Year-Over-Year Comparisons

In this section and elsewhere in this Quarterly Report on Form 10-Q we refer to changes in year-over-year results. Unless context otherwise requires, such references refer to changes between the three months ended June 30, 2024 and the three months ended June 30, 2023; and changes between the six months ended June 30, 2024 and the six months ended June 30, 2023.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Changes in net sales and gross profit by segment are shown in the following table (dollars in millions):


	Three Months Ended June 30,
	2024				2023
			% of				% of		$		%
	Amount		Net Sales		Amount		Net Sales		Change		Change
Net Sales:
Enterprise Solutions	$	298.8	40.5	%	$	287.1	39.1	%	$	11.7	4.1	%
Business Solutions		278.2	37.8			261.0	35.6			17.2	6.6
Public Sector Solutions		159.5	21.7			185.4	25.3			(25.9)	(14.0)
Total	$	736.5	100.0	%	$	733.5	100.0	%	$	3.0	0.4	%
Gross Profit:
Enterprise Solutions	$	46.1	15.4	%	$	42.9	15.0	%	$	3.2	7.2	%
Business Solutions		66.3	23.8			61.4	23.5			4.9	8.1
Public Sector Solutions		24.1	15.2			23.5	12.7			0.6	3.0
Total	$	136.5	18.5	%	$	127.8	17.4	%	$	8.7	6.9	%

Net sales increased for the second quarter of 2024 compared to the second quarter of 2023, as explained by the year-over-year changes discussed below:

●

Net sales of $298.8 million for the Enterprise Solutions segment reflect an increase of $11.7 million, or 4.1%. The increase in net sales is primarily due to increases in net sales of desktops, displays and sound, software, and notebooks/mobility of $19.1 million, $9.9 million, $4.1 million, and $2.2 million, respectively. These increases were partially offset by decreases in net sales of net/com products, other hardware/services, servers/storage, and accessories of $9.6 million, $8.6 million, $3.0 million, and $2.5 million, respectively.

●

Net sales of $278.2 million for the Business Solutions segment reflect an increase of $17.2 million, or 6.6%. The increase in net sales is primarily due to increases in net sales of servers/storage, notebooks/mobility, software, accessories, other hardware/services, and desktops of $11.5 million, $9.8 million, $3.9 million, $2.2 million, $1.2 million, and $1.1 million, respectively. These increases were partially offset by decreases in net sales of net/com products and displays and sound of $8.7 million and $3.7 million, respectively.

●

Net sales of $159.5 million for the Public Sector Solutions segment reflect a decrease of $25.9 million, or 14.0%. Sales to the federal government decreased by $8.3 million, or 24.6%, compared to the prior year quarter, and sales to state and local government and educational institutions decreased by $17.6 million, or 11.6%. The decrease in net sales is primarily due to decreases in net sales of net/com products, desktops, accessories, notebooks/mobility, software, and other hardware/services $7.9 million, $5.2 million, $5.0 million, $4.4 million, $3.5 million, and $1.5 million, respectively. These decreases were partially offset by an increase in net sales of servers/storage of $1.7 million.

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Gross profit and gross margin for the second quarter of 2024 increased year-over-year, as explained by the year-over-year changes discussed below:

●

Gross profit for the Enterprise Solutions segment increased by $3.2 million primarily due to the increase in net sales as discussed in the preceding paragraph. Gross margin increased by 40 basis points primarily due to changes in customer mix resulting in improved invoice margins in notebooks/mobility and desktops.

●

Gross profit for the Business Solutions segment increased by $4.9 million primarily due to the increase in net sales as discussed in the preceding paragraph. Gross margin increased by 30 basis points primarily due to improved invoice margins in accessories, net/com products, software, and notebooks/mobility.

●

Gross profit for the Public Sector Solutions segment remained substantially the same year-over-year. Gross margin increased by 250 basis points primarily due to improved invoice margins in notebooks/mobility and desktops associated with a few low-margin deals from the prior period.

Selling, general and administrative expenses for the second quarter of 2024 increased both in dollars and as a percentage of net sales compared to the second quarter of 2023. SG&A expenses attributable to our three segments and the remaining unallocated Headquarters/Other group expenses are summarized in the table below (dollars in millions):


	Three Months Ended June 30,
	2024				2023
			% of				% of
			Segment Net				Segment Net		$		%
	Amount		Sales		Amount		Sales		Change		Change
Enterprise Solutions	$	35.8	12.0	%	$	34.4	12.0	%	$	1.4	4.2	%
Business Solutions		44.1	15.9			42.5	16.3			1.6	3.8
Public Sector Solutions		21.5	13.5			21.8	11.7			(0.3)	(1.4)
Headquarters/Other, unallocated		3.8				2.3				1.5	62.0
Total	$	105.2	14.3	%	$	101.0	13.8	%	$	4.2	4.2	%

●

SG&A expenses for the Enterprise Solutions segment increased year-over-year in dollars but remained consistent as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to an increase in use of shared Headquarter services of $3.6 million, partially offset by decreases in personnel costs and advertising costs of $1.4 million and $0.4 million, respectively.

●

SG&A expenses for the Business Solutions segment increased year-over-year in dollars but decreased as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to increases in use of shared Headquarter services and advertising costs of $1.6 million and $0.8 million, respectively, partially offset by a decrease in other expenses of $1.0 million. SG&A expenses as a percentage of net sales were 15.9% for the Business Solutions segment for the second quarter of 2024, which reflects a decrease of 40 basis points and is primarily due to the increase in net sales discussed above.

●

SG&A expenses for the Public Sector Solutions segment remained substantially the same year-over-year in dollars but increased as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to decreases in other expenses, personnel costs, and advertising costs of $0.5 million, $0.3 million, and $0.2 million, respectively, partially offset by an increase in use of shared Headquarter services of $0.8 million. SG&A expenses as a percentage of net sales were 13.5% for the Public Sector Solutions segment for the second quarter of 2024, which reflects an increase of 180 basis points and is primarily due to the decrease in net sales discussed above.

●

SG&A expenses for the Headquarters/Other group increased year-over-year by $1.5 million primarily due to increases in personnel costs, service contracts/subscriptions, depreciation and amortization, and other expenses of $5.8 million, $0.7 million, $0.4 million, and $0.4 million, respectively, partially offset by a decrease in unallocated Headquarter overhead costs of $5.9 million. The Headquarters/Other group provides services to the three segments in areas such as finance, distribution center, human resources, IT, marketing, and product management. Most of the operating costs associated with such corporate Headquarters services are charged to the segments based on their estimated allocation usage of the underlying services.

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Restructuring and other charges for the second quarter of 2024 were $0.4 million, compared to $1.7 million for the second quarter of 2023. The restructuring and other charges were primarily related to expenses incurred in connection with the involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits.

Income from operations for the second quarter of 2024 increased to $30.9 million, compared to $25.1 million for the second quarter of 2023, primarily due to the increase in gross profit, partially offset by the increase in SG&A expenses, as discussed above. Income from operations as a percentage of net sales was 4.2% for the second quarter of 2024, compared to 3.4% for the prior year quarter, primarily due to the increase in gross profit, partially offset by the increase in SG&A expenses, as discussed above.

Interest income, net for the second quarter of 2024 increased to $4.6 million, compared to $1.9 million for the second quarter of 2023, primarily due to an increase in interest income of $2.8 million as a result of higher cash equivalent balances and interest rates on short-term investments.

Income taxes. Our provision for income taxes for the second quarter of 2024 increased to $9.4 million, compared to $7.2 million for the second quarter of 2023. Our effective tax rate decreased to 26.4% for the quarter ended June 30, 2024, compared to 26.9% for the quarter ended June 30, 2023, primarily due to non-recurring benefits included in the current year.

Net income for the second quarter of 2024 increased to $26.2 million, compared to $19.7 million for the second quarter of 2023, primarily due to a $5.8 million increase in income from operations and a $2.8 million increase in interest income, net, partially offset by an increase in the provision for income taxes of $2.2 million.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Changes in net sales and gross profit by segment are shown in the following table (dollars in millions):


	Six Months Ended June 30,
	2024				2023
			% of				% of		$		%
	Amount		Net Sales		Amount		Net Sales		Change		Change
Net Sales:
Enterprise Solutions	$	581.4	42.5	%	$	601.1	41.1	%	$	(19.7)	(3.3)	%
Business Solutions		534.1	39.0			534.1	36.6			—	—
Public Sector Solutions		253.0	18.5			325.9	22.3			(72.9)	(22.4)
Total	$	1,368.5	100.0	%	$	1,461.1	100.0	%	$	(92.6)	(6.3)	%
Gross Profit:
Enterprise Solutions	$	88.8	15.3	%	$	85.0	14.1	%	$	3.8	4.4	%
Business Solutions		126.7	23.7			121.3	22.7			5.4	4.5
Public Sector Solutions		39.1	15.5			43.8	13.4			(4.7)	(10.6)
Total	$	254.6	18.6	%	$	250.1	17.1	%	$	4.5	1.8	%

Net sales decreased for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as explained by the year-over-year changes discussed below:

●

Net sales of $581.4 million for the Enterprise Solutions segment reflect a decrease of $19.7 million, or 3.3%. The decrease in net sales is primarily due to decreases in net sales of notebooks/mobility, net/com products, other hardware/services, accessories, software, and servers/storage of $21.9 million, $10.2 million, $9.3 million, $8.5 million, $8.0 million, and $3.2 million, respectively. These decreases were partially offset by increases in net sales of desktops and displays and sound of $27.0 million and $14.5 million, respectively.

●

Net sales of $534.1 million for the Business Solutions segment remained substantially the same year-over-year. Increases in net sales of servers/storage, notebooks/mobility, accessories, and desktops of $8.8 million, $7.0 million, $3.8 million, and $0.5 million, respectively, were offset by decreases in net sales of net/com products, displays and sound, and other hardware/services of $15.2 million, $4.7 million, and $0.2 million, respectively.

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Net sales of $253.0 million for the Public Sector Solutions segment reflect a decrease of $72.9 million, or 22.4%. Sales to the federal government decreased by $47.7 million, or 52.6%, and sales to state and local government and educational institutions decreased by $25.2 million, or 10.7%. The decrease in net sales is primarily due to decreases in net sales of notebooks/mobility, net/com products, accessories, desktops, other hardware/services, software, and displays and sound of $17.3 million, $15.6 million, $10.9 million, $10.8 million, $7.9 million, $7.9 million, and $2.6 million, respectively.

Gross profit and gross margin for the six months ended June 30, 2024 increased year-over-year, as explained by the year-over-year changes discussed below:

●

Gross profit for the Enterprise Solutions segment increased by $3.8 million primarily due to improved invoice margins in desktops, displays and other hardware/services. Gross margin increased by 120 basis points primarily due to improved invoice margins in desktops, displays, and other hardware/services, as well as an increase in the amount of software sales recognized on a net basis.

●

Gross profit for the Business Solutions segment increased by $5.4 million primarily due to improved invoice margins in software, notebooks/mobility, accessories, and other hardware/services. Gross margin increased by 100 basis points primarily due to improved invoice margins in software, notebooks/mobility, accessories, and other hardware/services, as well as an increase in the amount of software sales recognized on a net basis.

●

Gross profit for the Public Sector Solutions segment decreased by $4.7 million primarily due to the decrease in net sales as discussed in the preceding paragraph, partially offset by improved invoice margins in notebooks/mobility, server/storage, and other hardware/services. Gross margin increased by 210 basis points primarily due to improved invoice margins in notebooks/mobility, server/storage, and other hardware/services.

Selling, general and administrative expenses for the six months ended June 30, 2024 increased both in dollars and as a percentage of net sales compared to the six months ended June 30, 2023. SG&A expenses attributable to our three segments and the remaining unallocated Headquarters/Other group expenses are summarized in the table below (dollars in millions):


	Six Months Ended June 30,
	2024				2023
			% of				% of
			Segment Net				Segment Net		$		%
	Amount		Sales		Amount		Sales		Change		Change
Enterprise Solutions	$	72.7	12.5	%	$	69.9	11.6	%	$	2.8	4.0	%
Business Solutions		88.7	16.6			85.8	16.1			2.9	3.3
Public Sector Solutions		41.8	16.5			42.0	12.9			(0.2)	(0.6)
Headquarters/Other, unallocated		6.6				6.5				0.1	3.1
Total	$	209.8	15.3	%	$	204.2	14.0	%	$	5.6	2.7	%

●

SG&A expenses for the Enterprise Solutions segment increased year-over-year both in dollars and as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to an increase in use of shared Headquarter services of $6.8 million, partially offset by a decrease in personnel costs of $3.3 million. SG&A expenses as a percentage of net sales were 12.5% for the Enterprise Solutions segment for the six months ended June 30, 2024, which reflects an increase of 90 basis points and is primarily due to the decrease in net sales discussed above.

●

SG&A expenses for the Business Solutions segment increased year-over-year both in dollars and as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to increases in use of shared Headquarter services and advertising costs of $2.4 million and $1.4 million, respectively, partially offset by decreases in other expenses and personnel costs of $0.6 million and $0.4 million, respectively. SG&A expenses as a percentage of net sales were 16.6% for the Business Solutions segment for the six months ended June 30, 2024, which reflects an increase of 50 basis points and is primarily due to the increase in SG&A expenses.

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●

SG&A expenses for the Public Sector Solutions segment remained substantially the same year-over-year in dollars but increased as a percentage of net sales. The year-over-year change in SG&A dollars was primarily attributable to decreases in personnel costs and other expenses of $0.9 million and $0.6 million, respectively, partially offset by a $1.2 million increase in use of shared Headquarter services. SG&A expenses as a percentage of net sales were 16.5% for the Public Sector Solutions segment for the six months ended June 30, 2024, which reflects an increase of 360 basis points and is primarily due to the decrease in net sales discussed above.

●

SG&A expenses for the Headquarters/Other group remained substantially the same year-over-year primarily due to increases in personnel costs, service contracts/subscriptions, and depreciation and amortization of $8.1 million, $1.7 million, and $0.8 million, respectively, partially offset by a decrease in unallocated Headquarter overhead costs of $10.3 million. The Headquarters/Other group provides services to the three segments in areas such as finance, distribution center, human resources, IT, marketing, and product management. Most of the operating costs associated with such corporate Headquarters services are charged to the segments based on their estimated allocation usage of the underlying services.

Restructuring and other charges for the six months ended June 30, 2024 were $0.4 million, compared to $2.6 million for the six months ended June 30, 2023. The restructuring and other charges were primarily related to expenses incurred in connection with the involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits.

Income from operations for the six months ended June 30, 2024 increased to $44.4 million, compared to $43.2 million for the six months ended June 30, 2023, primarily due to the increase in gross profit and decrease in restructuring and other charges, partially offset by the increase in SG&A expenses, as discussed above. Income from operations as a percentage of net sales was 3.2% for the six months ended June 30, 2024, compared to 3.0% for the six months ended June 30, 2023, primarily due to the decrease in net sales discussed above.

Interest income, net for the six months ended June 30, 2024 increased to $9.2 million, compared to $3.2 million for the six months ended June 30, 2023, primarily due to an increase in interest income of $6.0 million as a result of higher cash equivalent balances and interest rates on short-term investments.

Income taxes. Our provision for income taxes for the six months ended June 30, 2024 increased to $14.3 million, compared to $12.5 million for the six months ended June 30, 2023. Our effective tax rate decreased to 26.6% for the six months ended June 30, 2024, compared to 26.9% for the six months ended June 30, 2023, primarily due to non-recurring benefits included in the current year.

Net income for the six months ended June 30, 2024 increased to $39.3 million, compared to $33.9 million for the six months ended June 30, 2023, primarily due to a $6.0 million increase in interest income, net, partially offset by a $1.8 million increase in the provision for income taxes.

Liquidity and Capital Resources

Our primary sources of liquidity are internally generated funds from operations, short-term investments, and borrowings under our credit facility. We have historically used and expect to use in the future those funds to meet our capital requirements, which consist primarily of working capital for operational needs, capital expenditures for computer equipment and software used in our business, repurchases of our common stock for treasury, dividend payments, and as opportunities arise, possible acquisitions of new businesses.

We believe that funds generated from operations, short-term investments, and the available capacity under our credit facility will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next twelve calendar months and beyond such twelve calendar month period. Our investments in IT systems and infrastructure are designed to enable us to operate more efficiently and to provide our customers enhanced functionality.

We expect to meet our cash requirements for the next twelve months and beyond through a combination of cash on hand, short-term investments, cash generated from operations, and borrowings under our credit facility, as follows:

●

Cash and Cash Equivalents. As of June 30, 2024, we had $128.2 million in cash and cash equivalents.

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Short-term Investments. As of June 30, 2024, we had $257.6 million in short-term investments.

●

Cash Generated from Operations. We expect to generate cash flows from operations in excess of operating cash needs by generating earnings and managing net changes in inventories and receivables with changes in payables to generate positive cash flow.

●

Credit Facility. As of June 30, 2024, no borrowings were outstanding under our $50.0 million credit facility, which is available until March 31, 2025. Accordingly, our entire line of credit was available for borrowing as of June 30, 2024. This maximum borrowing capacity under our credit facility can be increased, at our option, to up to $80.0 million for approved acquisitions or other uses authorized by the bank. Borrowings are, however, limited by certain minimum collateral and earnings requirements, as described more fully below. As of June 30, 2024, we were in compliance with the covenants of our credit facility.

Our ability to continue funding our planned growth, both internally and externally, is dependent upon our ability to generate sufficient cash flow from operations or to obtain additional funds through equity or debt financing, or from other sources of financing, as may be required. While we do not anticipate needing any additional sources of financing to fund our operations at this time, if demand for IT products declines, or our customers are materially adversely impacted by the developing macroeconomic trends characterized by inflation and increased interest rates, our cash flows from operations may be substantially affected.

Dividends

A summary of 2024 dividend activity for our common stock is as follows:


Dividend Amount		Declaration Date	Record Date	Payment Date
$	0.10	February 12, 2024	February 27, 2024	March 15, 2024
$	0.10	April 30, 2024	May 14, 2024	May 29, 2024

On July 31, 2024, we announced that our Board of Directors declared a quarterly cash dividend on our common stock of $0.10 per share. The dividend will be paid on August 30, 2024 to all stockholders of record as of the close of business on August 13, 2024. The declaration and payment of any future dividends is at the discretion of our Board of Directors and will depend upon our financial position, strategic plans, general business conditions and any other factors deemed relevant by our Board of Directors.

Summary of Sources and Uses of Cash

Cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023, as reflected in our Unaudited Condensed Consolidated Statements of Cash Flows included in Item 1 of this Quarterly Report on Form 10-Q, are summarized in the following table (in millions):



	Six Months Ended June 30,
	2024		2023
Net cash provided by operating activities	$	95.7	$	135.4
Net cash used in investing activities		(103.4)		(4.8)
Net cash used in financing activities		(9.0)		(9.5)
(Decrease) increase in cash and cash equivalents	$	(16.7)	$	121.1

Cash provided by operating activities was $95.7 million for the six months ended June 30, 2024. Cash provided by operating activities resulted primarily from $39.3 million of net income and a $53.2 million increase in accounts payable. A decrease in accounts receivable of $7.6 million, an increase in accrued expenses and other liabilities of $6.2 million, and depreciation and amortization added back to net income of $6.5 million also contributed to the positive inflow of cash for the six months ended June 30, 2024. These inflows were partially offset by increases in inventory and prepaid expenses, income tax receivable, and other current assets of $12.4 million and $5.8 million, respectively. The increase in accounts payable was primarily driven by the timing of payments. For the six months ended June 30, 2023, cash provided by operating activities resulted primarily from net income adjusted for non-cash charges of $45.4 million, a decrease in inventory of $48.9 million, an increase in accounts payable of $44.6 million, and a decrease in accounts

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receivable of $16.4 million, partially offset by an increase in prepaid expenses and other current assets of $13.7 million and a decrease in accrued expenses and other liabilities of $6.4 million.

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average. Components of our cash conversion cycle are as follows:


	June 30,
(in days)	2024		2023
Days of sales outstanding (DSO)⁽¹⁾		68		68
Days of supply in inventory (DIO)⁽²⁾		21		24
Days of purchases outstanding (DPO)⁽³⁾		(48)		(42)
Cash conversion cycle		41		50

(1)	Represents the trade receivable at the end of the quarter divided by average daily net sales for the same three-month period.

(2)	Represents the inventory balance at the end of the quarter divided by average daily cost of sales for the same three-month period.

(3)	Represents the accounts payable balance at the end of the quarter divided by average daily cost of sales for the same three-month period.

The cash conversion cycle decreased to 41 days at June 30, 2024, compared to 50 days at June 30, 2023. The decrease in DIO is consistent with the decrease in inventory for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase in DPO is consistent with the increase in accounts payable as of June 30, 2024 compared to June 30, 2023.

Cash used in investing activities for the six months ended June 30, 2024 consisted of $203.3 million of purchases of U.S. Government treasury securities, $103.3 million of maturities of U.S. Government treasury securities, and $3.4 million of purchases of property and equipment. These property and equipment expenditures were primarily for computer equipment and capitalized internally developed software in connection with investments in our IT infrastructure. In the prior year period, we made similar property and equipment investments of $4.8 million.

Cash used in financing activities for the six months ended June 30, 2024 consisted of $10.6 million of aggregate borrowings and repayments, $3.6 million of treasury purchases, $5.3 million of dividend payments, $0.5 million of issuances of stock under the Employee Stock Purchase Plan, and $0.6 million payments of payroll taxes on stock-based compensation through shares withheld. In the prior year period, financing activities primarily consisted of $5.4 million of treasury purchases, $4.2 million of dividend payments, $0.5 million of issuances of stock under the Employee Stock Purchase Plan, and $0.5 million payments of payroll taxes on stock-based compensation through shares withheld.

Debt Instruments, Contractual Agreements, and Related Covenants

Below is a summary of certain provisions of our credit facility and other contractual obligations. For more information about the restrictive covenants in our credit facility, see “Factors Affecting Sources of Liquidity” below. For more information about our obligations, commitments, and contingencies, see our condensed consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q.

Credit Facility. Our credit facility extends until March 2025 and is collateralized by our accounts receivable. As of June 30, 2024, our borrowing capacity under the credit facility was up to $50.0 million. Amounts outstanding under this facility bear interest at the greatest of (i) the prime rate (8.50% at June 30, 2024), (ii) the federal funds effective rate plus 0.50% per annum, and (iii) the daily BSBY Rate, plus 1.00% per annum, provided that the rate shall at no time be less than 0% per annum. In addition, we have the ability to increase our borrowing capacity under the credit facility up to an additional $30.0 million provided that we meet certain additional borrowing requirements and obtain the consent of the administrative agent. Our credit facility is subject to certain covenant requirements which are described below under “Factors Affecting Sources of Liquidity”. We did not have any borrowings outstanding under the credit facility as of June 30, 2024.

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Cash receipts are automatically applied against any outstanding borrowings. Any excess cash on account may either remain on account to generate earned credits to offset up to 100% of cash management fees, or may be invested in short-term qualified investments. Borrowings under the credit facility are classified as current in our condensed consolidated balance sheets. As of June 30, 2024, the entire $50.0 million facility was available for borrowing.

Operating Leases. We lease facilities from a related party, which is a company affiliated with us through common ownership, and facilities from third parties under non-cancelable operating leases. Certain leases require us to pay real estate taxes, insurance, and common area maintenance charges. See “Item 2. Properties” in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding our operating leases.

Factors Affecting Sources of Liquidity

Internally Generated Funds. The key factors affecting our internally generated funds are our ability to manage costs and fully achieve our operating efficiencies, timely collection of our customer receivables, and management of our inventory levels.

Credit Facility. Our credit facility extends until March 2025 and is collateralized by our accounts receivable. As of June 30, 2024, the entire $50.0 million facility was available for borrowing. Our credit facility contains certain financial ratios and operational covenants and other restrictions (including restrictions on additional debt, guarantees, and other distributions, investments, and liens) with which we and all of our subsidiaries must comply. Any failure to comply with these covenants would constitute a default and could prevent us from borrowing additional funds under this line of credit. This credit facility contains two financial tests:

●

The funded debt ratio (defined as the average outstanding advances under the line for the quarter, divided by the consolidated trailing twelve months Adjusted EBITDA) must not be more than 2.0 to 1.0. Such amount was calculated as 0.0 to 1.0 at June 30, 2024, and accordingly, the funded debt ratio did not limit potential borrowings as of June 30, 2024. Future decreases in our consolidated trailing twelve months Adjusted EBITDA could limit our potential borrowings under the line of credit.

●

Minimum consolidated net worth (defined as our consolidated total assets less our consolidated total liabilities) must be at least $346.7 million, plus 50% of consolidated net income for each quarter, beginning with the quarter ended December 31, 2016 (loss quarters not counted). Such amount was calculated as $622.7 million at June 30, 2024, whereas our actual consolidated stockholders’ equity at that date was $874.9 million.

Capital Markets. Our ability to raise additional funds in the capital market depends upon, among other things, general economic conditions, the condition of the IT industry, our financial performance and stock price, and the state of the capital markets. In addition, market volatility, inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our critical accounting policies and estimates have not materially changed from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.

RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

Recently issued financial accounting standards are detailed in Note 1, “Basis of Presentation,” in the Notes to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a description of our market risks, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2023. No material changes related to our market risks have occurred since December 31, 2023.

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Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II ―OTHER INFORMATION

Item 1. Legal Proceedings

For information related to legal proceedings, see the discussion in Note 8 - “Commitments and Contingencies” in the Notes to our Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which information is incorporated by reference into this Part II, Item 1.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial position, and results of operations. Risk factors which could cause actual results to differ materially from those suggested by forward-looking statements include but are not limited to those discussed or identified in this document, in our other public filings with the SEC, and those contained in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, incorporated by reference herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Repurchases under our stock repurchase program are made from time to time at management’s discretion in accordance with applicable federal securities laws. All repurchases of our common stock have been recorded as treasury stock. The following table summarizes information relating to purchases of common stock made by or on our behalf during the quarter ended June 30, 2024 (dollars in thousands, except per share data):


Issuer Purchases of Equity Securities
				Total Number of	Approximate Dollar Value
				Shares Purchased as	of Shares that May Yet Be
	Total Number			Part of Publicly	Purchased Under the Plans
	of Shares	Average Price Paid		Announced Plans or	or Programs
Period	Purchased	Per Share		Programs (1)	(in millions) (1)(2)
04/01/24-04/30/24	14,087	$	62.98	14,087	$	31.2
05/01/24-05/31/24	21,988		64.45	21,988	$	69.8
06/01/24-06/30/24	20,641		64.59	20,641	$	68.5
	56,716	$	64.14	56,716

(1)

We have repurchased in aggregate approximately 2.8 million shares of our common stock for approximately $51.5 million pursuant to the repurchase program approved by our Board of Directors.

(2)

On March 28, 2001, we announced that our Board of Directors authorized the spending of up to $15.0 million to repurchase shares of our common stock. On each of February 11, 2014, December 17, 2018, November 22, 2022, and May 1, 2024, our Board of Directors approved increases of $15.0 million, $25.0 million, $25.0 million, and $40.0 million, respectively, to the repurchase program bringing the aggregate authorized amount under the repurchase program to $120.0 million. There is no fixed termination date for this repurchase program. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions. The timing and amount of any share repurchases will be based on market conditions and other factors.

Item 5. Other Information

Director and Officer Trading Arrangements

None of our directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a Rule 10b5-1 trading agreement or a non-Rule 10b5-1 trading agreement (as defined in Item 408(c) of Regulation S-K) during the second quarter of 2024.

Table of Contents

Item 6 - Exhibits


Exhibit Number		Description

3.1		Amended and Restated Certificate of Incorporation of PC Connection, Inc., as amended (incorporated by reference to Exhibit 3.1 to the Company’s registration statement on Form S-4 (333-63272) filed on June 19, 2001).

3.2		Amended and Restated Bylaws of PC Connection, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K, filed on January 9, 2008).
31.1	*	Certification of the Company’s President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	*	Certification of the Company’s Senior Vice President and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	*	Certification of the Company’s President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	*	Certification of the Company’s Senior Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	*	Inline XBRL Instance Document* - The Instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH	*	Inline XBRL Taxonomy Extension Schema Document.

101.CAL	*	Inline XBRL Taxonomy Calculation Linkbase Document.

101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	*	Inline XBRL Taxonomy Label Linkbase Document.

101.PRE	*	Inline XBRL Taxonomy Presentation Linkbase Document.

104	*	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

* Submitted electronically herewith.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023, (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023, (iii) Condensed Consolidated Statements of Other Comprehensive Income for the three and six months ended June 30, 2024 and 2023, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023, (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements.

Table of Contents

SIGNATURES

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

PC CONNECTION, INC.


Date:	July 31, 2024	By:	/s/ TIMOTHY J. MCGRATH
			Timothy J. McGrath
			President and Chief Executive Officer (Duly Authorized Officer)

Date:	July 31, 2024	By:	/s/ THOMAS C. BAKER
			Thomas C. Baker
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION

I, Timothy J. McGrath, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of PC Connection, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

6
Date: July 31, 2024		/s/ TIMOTHY J. MCGRATH
		Timothy J. McGrath
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Thomas C. Baker, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of PC Connection, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: July 31, 2024		/s/ THOMAS C. BAKER
		Thomas C. Baker
		Senior Vice President, Chief Financial Officer and Treasurer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PC Connection, Inc. (the “Company”) for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Timothy J. McGrath, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: July 31, 2024		/s/ TIMOTHY J. MCGRATH
		Timothy J. McGrath
		President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PC Connection, Inc. (the “Company”) for the period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Thomas C. Baker, Senior Vice President, Chief Financial Officer and Treasurer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: July 31, 2024		/s/ THOMAS C. BAKER
		Thomas C. Baker
		Senior Vice President, Chief Financial Officer and Treasurer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2024	Jul. 24, 2024
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2024
Securities Act 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		26,293,202
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001050377
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
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	3,917	4,340
Goodwill	73,602	73,602
Intangible, net	2,819	3,428
Other assets	1,266	1,714
Total Assets	1,283,485	1,188,381
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
Noncurrent operating lease liabilities	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 INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
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 before taxes	35,568	26,945	53,599	46,348
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 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 STATEMENTS OF OTHER COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Condensed Consolidated Statements Of Other Comprehensive Income
Net Income (Loss)	$ 26,161	$ 19,697	$ 39,315	$ 33,895
Other comprehensive loss:
Unrealized losses on available-for-sale investments, net of tax of $11 and $49 for the three and six months ended June 30, 2024, respectively, and net of tax of $0 for the three and six months ended June 30, 2023, respectively	(41)		(184)
Comprehensive income	$ 26,120	$ 19,697	$ 39,131	$ 33,895

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Condensed Consolidated Statements Of Other Comprehensive Income
Unrealized losses on available-for-sale investments, tax	$ 11	$ 0	$ 49	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Treasury Shares	Total
Balance at Dec. 31, 2022	$ 291	$ 125,784	$ 686,037		$ (45,937)	$ 766,175
Balance (in shares) at Dec. 31, 2022	29,123
Balance - Treasury Shares (in shares) at Dec. 31, 2022					(2,773)
Issuance of common stock under Employee Stock Purchase Plan		537				537
Issuance of common stock under Employee Stock Purchase Plan (in shares)	13
Stock-based compensation expense		3,636				3,636
Restricted stock units vested (in shares)	22
Shares withheld for taxes paid on stock awards		(471)				(471)
Repurchase of common stock for treasury					$ (5,446)	(5,446)
Repurchase of common stock for treasury (in shares)					(129)
Dividend declaration			(4,206)			(4,206)
Net Income (Loss)			33,895			33,895
Balance at Jun. 30, 2023	$ 291	129,486	715,726		$ (51,383)	794,120
Balance (in shares) at Jun. 30, 2023	29,158
Balance - Treasury Shares (in shares) at Jun. 30, 2023					(2,902)
Balance at Mar. 31, 2023	$ 291	127,424	698,128		$ (49,360)	776,483
Balance (in shares) at Mar. 31, 2023	29,133
Balance - Treasury Shares (in shares) at Mar. 31, 2023					(2,852)
Issuance of common stock under Employee Stock Purchase Plan		537				537
Issuance of common stock under Employee Stock Purchase Plan (in shares)	13
Stock-based compensation expense		1,783				1,783
Restricted stock units vested (in shares)	12
Shares withheld for taxes paid on stock awards		(258)				(258)
Repurchase of common stock for treasury					$ (2,023)	(2,023)
Repurchase of common stock for treasury (in shares)					(50)
Dividend declaration			(2,099)			(2,099)
Net Income (Loss)			19,697			19,697
Balance at Jun. 30, 2023	$ 291	129,486	715,726		$ (51,383)	794,120
Balance (in shares) at Jun. 30, 2023	29,158
Balance - Treasury Shares (in shares) at Jun. 30, 2023					(2,902)
Balance at Dec. 31, 2023	$ 293	130,878	760,898	$ 81	$ (51,383)	840,767
Balance (in shares) at Dec. 31, 2023	29,262
Balance - Treasury Shares (in shares) at Dec. 31, 2023					(2,902)
Issuance of common stock under Employee Stock Purchase Plan		537				537
Issuance of common stock under Employee Stock Purchase Plan (in shares)	9
Stock-based compensation expense		4,197				4,197
Restricted stock units vested (in shares)	23
Shares withheld for taxes paid on stock awards		(645)				(645)
Repurchase of common stock for treasury					$ (3,788)	(3,788)
Repurchase of common stock for treasury (in shares)					(60)
Dividend declaration			(5,271)			(5,271)
Net Income (Loss)			39,315			39,315
Other comprehensive income, net of tax				(184)		(184)
Balance at Jun. 30, 2024	$ 293	134,967	794,942	(103)	$ (55,171)	874,928
Balance (in shares) at Jun. 30, 2024	29,294
Balance - Treasury Shares (in shares) at Jun. 30, 2024					(2,962)
Balance at Mar. 31, 2024	$ 293	132,596	771,416	(62)	$ (51,571)	852,672
Balance (in shares) at Mar. 31, 2024	29,271
Balance - Treasury Shares (in shares) at Mar. 31, 2024					(2,905)
Issuance of common stock under Employee Stock Purchase Plan		537				537
Issuance of common stock under Employee Stock Purchase Plan (in shares)	9
Stock-based compensation expense		2,248				2,248
Restricted stock units vested (in shares)	14
Shares withheld for taxes paid on stock awards		(414)				(414)
Repurchase of common stock for treasury					$ (3,600)	(3,600)
Repurchase of common stock for treasury (in shares)					(57)
Dividend declaration			(2,635)			(2,635)
Net Income (Loss)			26,161			26,161
Other comprehensive income, net of tax				(41)		(41)
Balance at Jun. 30, 2024	$ 293	$ 134,967	$ 794,942	$ (103)	$ (55,171)	$ 874,928
Balance (in shares) at Jun. 30, 2024	29,294
Balance - Treasury Shares (in shares) at Jun. 30, 2024					(2,962)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Condensed Consolidated Statement of Changes in Stockholders' Equity
Dividend per Share	$ 0.10	$ 0.08	$ 0.10	$ 0.08

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows provided by Operating Activities:
Net income	$ 39,315	$ 33,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,539	6,167
Adjustments to credit losses reserve	410	1,247
Stock-based compensation expense	4,197	3,636
Deferred income taxes	1,623
Amortization of discount on short-term investments	(5,593)
Loss on disposal of fixed assets	36	475
Changes in assets and liabilities:
Accounts receivable	7,598	16,370
Inventories	(12,434)	48,948
Prepaid expenses, income tax receivable, and other current assets	(5,823)	(13,653)
Other non-current assets	448	140
Accounts payable	53,172	44,584
Accrued expenses and other liabilities	6,188	(6,364)
Net cash provided by operating activities	95,676	135,445
Cash Flows used in Investing Activities:
Purchases of short-term investments	(203,278)
Maturities of short-term investments	103,280
Purchases of property and equipment	(3,427)	(4,860)
Net cash used in investing activities	(103,425)	(4,860)
Cash Flows used in Financing Activities:
Proceeds from short-term borrowings	10,560	67,895
Repayment of short-term borrowings	(10,560)	(67,895)
Purchase of common stock for treasury shares	(3,613)	(5,392)
Dividend payments	(5,271)	(4,206)
Issuance of stock under Employee Stock Purchase Plan	537	537
Payments of payroll taxes on stock-based compensation through shares withheld	(645)	(471)
Net cash used in financing activities	(8,992)	(9,532)
(Decrease) increase in cash and cash equivalents	(16,741)	121,053
Cash and cash equivalents, beginning of year	144,954	122,930
Cash and cash equivalents, end of period	128,213	243,983
Non-cash Investing and Financing Activities:
Accrued purchases of property and equipment	347	205
Accrued purchase of common stock for treasury shares	211
Accrued excise tax on treasury purchases	18	54
Supplemental Cash Flow Information:
Income taxes paid	17,946	27,410
Interest paid	$ 2	$ 18

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2024

Basis of Presentation

Basis of Presentation

Note 1– Basis of Presentation

Use of Estimates in the Preparation of Financial Statements

Cash and Cash Equivalents and Investments

Treasury Stock, at Cost

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Employee separations	$	415	$	1,701	$	415	$	2,399
Other charges		—		45		—		244
Total restructuring and other charges	$	415	$	1,746	$	415	$	2,643

Included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2024 was $130 related to unpaid termination benefits.

Recently Issued Financial Accounting Standards

REVENUE

6 Months Ended

Jun. 30, 2024

Revenue

Revenue

Note 2–Revenue

The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Three Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	89,802	$	97,841	$	69,816	$	257,459
Desktops		52,680		20,105		12,792		85,577
Software		21,628		37,775		9,571		68,974
Servers/Storage		15,691		34,056		13,640		63,387
Net/Com Products		19,107		19,845		14,312		53,264
Displays and Sound		37,265		19,981		16,745		73,991
Accessories		38,645		28,663		11,470		78,778
Other Hardware/Services		23,990		19,932		11,127		55,049
Total net sales	$	298,808	$	278,198	$	159,473	$	736,479


	Three Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	87,590	$	88,081	$	74,231	$	249,902
Desktops		33,572		19,011		17,971		70,554
Software		17,561		33,828		13,059		64,448
Servers/Storage		18,705		22,605		11,959		53,269
Net/Com Products		28,727		28,584		22,233		79,544
Displays and Sound		27,322		23,654		16,785		67,761
Accessories		41,095		26,506		16,488		84,089
Other Hardware/Services		32,581		18,758		12,641		63,980
Total net sales	$	287,153	$	261,027	$	185,367	$	733,547

The following tables represent a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Six Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	180,033	$	189,997	$	108,698	$	478,728
Desktops		90,717		38,223		21,539		150,479
Software		48,748		68,427		15,121		132,296
Servers/Storage		28,058		55,667		22,146		105,871
Net/Com Products		39,069		41,690		19,917		100,676
Displays and Sound		68,529		41,733		27,348		137,610
Accessories		80,177		59,036		19,066		158,279
Other Hardware/Services		46,136		39,294		19,135		104,565
Total net sales	$	581,467	$	534,067	$	252,970	$	1,368,504


	Six Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	201,908	$	183,000	$	126,005	$	510,913
Desktops		63,714		37,773		32,388		133,875
Software		56,795		68,404		22,976		148,175
Servers/Storage		31,212		46,896		21,946		100,054
Net/Com Products		49,259		56,888		35,553		141,700
Displays and Sound		54,042		46,467		29,987		130,496
Accessories		88,689		55,241		29,961		173,891
Other Hardware/Services		55,477		39,472		27,039		121,988
Total net sales	$	601,096	$	534,141	$	325,855	$	1,461,092

Contract Balances

The following table provides information about contract liabilities from arrangements with customers as of June 30, 2024 and December 31, 2023 (in thousands).


	June 30, 2024		December 31, 2023
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,100	$	4,206

Changes in the contract liability balances during the six months ended June 30, 2024 and 2023 are as follows (in thousands):


	2024
Balance at December 31, 2023	$	4,206
Cash received in advance and not recognized as revenue		9,769
Amounts recognized as revenue as performance obligations satisfied		(6,875)
Balance at June 30, 2024	$	7,100

	2023
Balance at December 31, 2022	$	4,266
Cash received in advance and not recognized as revenue		11,980
Amounts recognized as revenue as performance obligations satisfied		(9,683)
Balance at June 30, 2023	$	6,563

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2024

Fair Value Measurements

Fair Value Measurements

Note 3–Fair Value Measurements

Cash equivalents and short-term investments consist of the following (in thousands):


	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	108,117	$	—	$	—	$	108,117
Short-term investments:
U.S. Government treasury securities		257,720		11		(141)		257,590
Total	$	365,837	$	11	$	(141)	$	365,707

	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	129,123	$	—	$	—	$	129,123
Short-term investments:
U.S. Government treasury securities		152,129		103		—		152,232
Total	$	281,252	$	103	$	—	$	281,355

Fair Value

●

Level 1 inputs: Quoted prices for identical assets or liabilities in active markets;

●

Level 2 inputs: Observable inputs other than those described as Level 1; and

●

Level 3 inputs: Unobservable inputs that are supported by little or no market activities and are based on significant assumptions and estimates.

As of June 30, 2024 and December 31, 2023, the fair value of the Company’s investments were all measured using level 1 inputs.

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Earnings Per Share

Note 4–Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	26,161	$	19,697	$	39,315	$	33,895
Denominator:
Denominator for basic earnings per share		26,348		26,256		26,355		26,291
Dilutive effect of employee stock awards		172		109		167		109
Denominator for diluted earnings per share		26,520		26,365		26,522		26,400
Earnings per share:
Basic	$	0.99	$	0.75	$	1.49	$	1.29
Diluted	$	0.99	$	0.75	$	1.48	$	1.28

LEASES

6 Months Ended

Jun. 30, 2024

Lessee Disclosure [Abstract]

Leases

Note 5–Leases

The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership.


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	—	$	485	$	485	$	—	$	944	$	944
Short-term lease cost		421		140		561		841		281		1,122
Total lease cost	$	421	$	625	$	1,046	$	841	$	1,225	$	2,066

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	—	$	532	$	532	$	—	$	977	$	977

Weighted-average remaining lease term (in years):
Capitalized operating leases								—		2.43		2.43

Weighted-average discount rate:
Capitalized operating leases								3.92%		4.28%		4.21%

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	314	$	590	$	904	$	627	$	1,299	$	1,926
Short-term lease cost		107		115		222		214		136		350
Total lease cost	$	421	$	705	$	1,126	$	841	$	1,435	$	2,276

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	314	$	602	$	916	$	627	$	1,245	$	1,872

Weighted-average remaining lease term (in years):
Capitalized operating leases								0.42		3.59		3.33

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

As of June 30, 2024, 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
2024, excluding the six months ended June 30, 2024	$	713	$	394	$	1,107
2025		163		1,817		1,980
2026		163		1,042		1,205
2027		1		236		237
2028		—		161		161
Thereafter		—		—		—
	$	1,040	$	3,650	$	4,690

Imputed interest						(231)
Lease liability balance at June 30, 2024					$	4,459

SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2024

Segment Information

Segment and Related Disclosures

Note 6–Segment Information


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Net sales:
Enterprise Solutions	$	298,808	$	287,153	$	581,467	$	601,096
Business Solutions		278,198		261,027		534,067		534,141
Public Sector Solutions		159,473		185,367		252,970		325,855
Total net sales	$	736,479	$	733,547	$	1,368,504	$	1,461,092
Operating income (loss):
Enterprise Solutions	$	10,230	$	7,511	$	16,077	$	14,033
Business Solutions		22,229		18,831		38,018		35,384
Public Sector Solutions		2,714		1,650		(2,636)		1,679
Headquarters/Other		(4,254)		(2,921)		(7,076)		(7,908)
Total operating income		30,919		25,071		44,383		43,188
Interest income, net		4,649		1,874		9,216		3,160
Income before taxes	$	35,568	$	26,945	$	53,599	$	46,348
Selected operating expense:
Depreciation and amortization:
Enterprise Solutions	$	221	$	423	$	426	$	847
Business Solutions		147		158		310		317
Public Sector Solutions		23		20		46		39
Headquarters/Other		2,882		2,493		5,757		4,964
Total depreciation and amortization	$	3,273	$	3,094	$	6,539	$	6,167
Total assets:
Enterprise Solutions					$	729,450	$	678,104
Business Solutions						537,655		472,566
Public Sector Solutions						107,382		102,652
Headquarters/Other						(91,002)		(89,047)
Total assets					$	1,283,485	$	1,164,275

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2024

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Note 7–Accumulated Other Comprehensive Income (Loss)


	Six Months Ended
	June 30, 2024
Balance - December 31, 2023	$	81
Other comprehensive income (loss) before reclassifications, net of tax		(158)
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		26
Net other comprehensive income (loss)		(184)
Balance - June 30, 2024	$	(103)

	Six Months Ended
	June 30, 2023
Balance - December 31, 2022	$	—
Other comprehensive income (loss) before reclassifications, net of tax		—
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		—
Net other comprehensive income (loss)		—
Balance - June 30, 2023	$	—

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

Note 8–Commitments and Contingencies

BANK BORROWINGS

6 Months Ended

Jun. 30, 2024

Bank Borrowings

Bank Borrowings

Note 9–Bank Borrowings

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 26,161	$ 19,697	$ 39,315	$ 33,895

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2024

Summary of Significant Accounting Policies

Basis of Presentation

Use of Estimates in the Preparation of Financial Statements

Cash and Cash Equivalents and Investments

Treasury Stock, at Cost

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Employee separations	$	415	$	1,701	$	415	$	2,399
Other charges		—		45		—		244
Total restructuring and other charges	$	415	$	1,746	$	415	$	2,643

Included in accrued expenses and other liabilities on the condensed consolidated balance sheets as of June 30, 2024 was $130 related to unpaid termination benefits.

Recently Issued Financial Accounting Standards

BASIS OF PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2024

Basis of Presentation

Schedule of 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Employee separations	$	415	$	1,701	$	415	$	2,399
Other charges		—		45		—		244
Total restructuring and other charges	$	415	$	1,746	$	415	$	2,643

REVENUE (Tables)

6 Months Ended

Jun. 30, 2024

Revenue

Schedule of disaggregation of revenue from contracts with customers

The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Three Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	89,802	$	97,841	$	69,816	$	257,459
Desktops		52,680		20,105		12,792		85,577
Software		21,628		37,775		9,571		68,974
Servers/Storage		15,691		34,056		13,640		63,387
Net/Com Products		19,107		19,845		14,312		53,264
Displays and Sound		37,265		19,981		16,745		73,991
Accessories		38,645		28,663		11,470		78,778
Other Hardware/Services		23,990		19,932		11,127		55,049
Total net sales	$	298,808	$	278,198	$	159,473	$	736,479


	Three Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	87,590	$	88,081	$	74,231	$	249,902
Desktops		33,572		19,011		17,971		70,554
Software		17,561		33,828		13,059		64,448
Servers/Storage		18,705		22,605		11,959		53,269
Net/Com Products		28,727		28,584		22,233		79,544
Displays and Sound		27,322		23,654		16,785		67,761
Accessories		41,095		26,506		16,488		84,089
Other Hardware/Services		32,581		18,758		12,641		63,980
Total net sales	$	287,153	$	261,027	$	185,367	$	733,547

The following tables represent a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2024 and 2023, along with the segment for each category (in thousands).


	Six Months Ended June 30, 2024
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	180,033	$	189,997	$	108,698	$	478,728
Desktops		90,717		38,223		21,539		150,479
Software		48,748		68,427		15,121		132,296
Servers/Storage		28,058		55,667		22,146		105,871
Net/Com Products		39,069		41,690		19,917		100,676
Displays and Sound		68,529		41,733		27,348		137,610
Accessories		80,177		59,036		19,066		158,279
Other Hardware/Services		46,136		39,294		19,135		104,565
Total net sales	$	581,467	$	534,067	$	252,970	$	1,368,504


	Six Months Ended June 30, 2023
	Enterprise Solutions		Business Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	201,908	$	183,000	$	126,005	$	510,913
Desktops		63,714		37,773		32,388		133,875
Software		56,795		68,404		22,976		148,175
Servers/Storage		31,212		46,896		21,946		100,054
Net/Com Products		49,259		56,888		35,553		141,700
Displays and Sound		54,042		46,467		29,987		130,496
Accessories		88,689		55,241		29,961		173,891
Other Hardware/Services		55,477		39,472		27,039		121,988
Total net sales	$	601,096	$	534,141	$	325,855	$	1,461,092

Schedule of changes in contract liability balances

The following table provides information about contract liabilities from arrangements with customers as of June 30, 2024 and December 31, 2023 (in thousands).


	June 30, 2024		December 31, 2023
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,100	$	4,206

Changes in the contract liability balances during the six months ended June 30, 2024 and 2023 are as follows (in thousands):


	2024
Balance at December 31, 2023	$	4,206
Cash received in advance and not recognized as revenue		9,769
Amounts recognized as revenue as performance obligations satisfied		(6,875)
Balance at June 30, 2024	$	7,100

	2023
Balance at December 31, 2022	$	4,266
Cash received in advance and not recognized as revenue		11,980
Amounts recognized as revenue as performance obligations satisfied		(9,683)
Balance at June 30, 2023	$	6,563

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Measurements

Schedule of available-for-sale investments within cash equivalents and short-term investments

Cash equivalents and short-term investments consist of the following (in thousands):


	June 30, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	108,117	$	—	$	—	$	108,117
Short-term investments:
U.S. Government treasury securities		257,720		11		(141)		257,590
Total	$	365,837	$	11	$	(141)	$	365,707

	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents:
Money market funds	$	129,123	$	—	$	—	$	129,123
Short-term investments:
U.S. Government treasury securities		152,129		103		—		152,232
Total	$	281,252	$	103	$	—	$	281,355

EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Computation of basic and diluted earnings per share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	26,161	$	19,697	$	39,315	$	33,895
Denominator:
Denominator for basic earnings per share		26,348		26,256		26,355		26,291
Dilutive effect of employee stock awards		172		109		167		109
Denominator for diluted earnings per share		26,520		26,365		26,522		26,400
Earnings per share:
Basic	$	0.99	$	0.75	$	1.49	$	1.29
Diluted	$	0.99	$	0.75	$	1.48	$	1.28

LEASES (Tables)

6 Months Ended

Jun. 30, 2024

Lessee Disclosure [Abstract]

Schedule of lease cost


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	—	$	485	$	485	$	—	$	944	$	944
Short-term lease cost		421		140		561		841		281		1,122
Total lease cost	$	421	$	625	$	1,046	$	841	$	1,225	$	2,066

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	—	$	532	$	532	$	—	$	977	$	977

Weighted-average remaining lease term (in years):
Capitalized operating leases								—		2.43		2.43

Weighted-average discount rate:
Capitalized operating leases								3.92%		4.28%		4.21%

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	314	$	590	$	904	$	627	$	1,299	$	1,926
Short-term lease cost		107		115		222		214		136		350
Total lease cost	$	421	$	705	$	1,126	$	841	$	1,435	$	2,276

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	314	$	602	$	916	$	627	$	1,245	$	1,872

Weighted-average remaining lease term (in years):
Capitalized operating leases								0.42		3.59		3.33

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

Schedule of future lease payments on capitalized operating leases

As of June 30, 2024, 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
2024, excluding the six months ended June 30, 2024	$	713	$	394	$	1,107
2025		163		1,817		1,980
2026		163		1,042		1,205
2027		1		236		237
2028		—		161		161
Thereafter		—		—		—
	$	1,040	$	3,650	$	4,690

Imputed interest						(231)
Lease liability balance at June 30, 2024					$	4,459

SEGMENT INFORMATION (Tables)

6 Months Ended

Jun. 30, 2024

Segment Information

Segment information applicable to reportable operating segments


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Net sales:
Enterprise Solutions	$	298,808	$	287,153	$	581,467	$	601,096
Business Solutions		278,198		261,027		534,067		534,141
Public Sector Solutions		159,473		185,367		252,970		325,855
Total net sales	$	736,479	$	733,547	$	1,368,504	$	1,461,092
Operating income (loss):
Enterprise Solutions	$	10,230	$	7,511	$	16,077	$	14,033
Business Solutions		22,229		18,831		38,018		35,384
Public Sector Solutions		2,714		1,650		(2,636)		1,679
Headquarters/Other		(4,254)		(2,921)		(7,076)		(7,908)
Total operating income		30,919		25,071		44,383		43,188
Interest income, net		4,649		1,874		9,216		3,160
Income before taxes	$	35,568	$	26,945	$	53,599	$	46,348
Selected operating expense:
Depreciation and amortization:
Enterprise Solutions	$	221	$	423	$	426	$	847
Business Solutions		147		158		310		317
Public Sector Solutions		23		20		46		39
Headquarters/Other		2,882		2,493		5,757		4,964
Total depreciation and amortization	$	3,273	$	3,094	$	6,539	$	6,167
Total assets:
Enterprise Solutions					$	729,450	$	678,104
Business Solutions						537,655		472,566
Public Sector Solutions						107,382		102,652
Headquarters/Other						(91,002)		(89,047)
Total assets					$	1,283,485	$	1,164,275

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2024

Accumulated Other Comprehensive Income (Loss)

Schedule of changes in accumulated comprehensive income (loss)


	Six Months Ended
	June 30, 2024
Balance - December 31, 2023	$	81
Other comprehensive income (loss) before reclassifications, net of tax		(158)
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		26
Net other comprehensive income (loss)		(184)
Balance - June 30, 2024	$	(103)

	Six Months Ended
	June 30, 2023
Balance - December 31, 2022	$	—
Other comprehensive income (loss) before reclassifications, net of tax		—
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax		—
Net other comprehensive income (loss)		—
Balance - June 30, 2023	$	—

BASIS OF PRESENTATION - Restructuring and Other Charges (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Restructuring and other charges
Restructuring and other charges	$ 415	$ 1,746	$ 415	$ 2,643
Treasury stock
Common stock repurchases as treasury stock including excise tax			$ 3,788	$ 5,446
Excise tax rate on certain stock repurchases			1.00%	1.00%
Cash and cash equivalents and investments
Interest income on cash equivalents and short-term investments	4,655	1,874	$ 9,220	$ 3,182
Accrued expenses and other liabilities
Restructuring and other charges
Accrued employee termination benefits	130		130
Employee separations
Restructuring and other charges
Restructuring and other charges	$ 415	1,701	$ 415	2,399
Other charges
Restructuring and other charges
Restructuring and other charges		$ 45		$ 244

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Disaggregation of revenue
Net sales	$ 736,479	$ 733,547	$ 1,368,504	$ 1,461,092
Notebooks/Mobility
Disaggregation of revenue
Net sales	257,459	249,902	478,728	510,913
Desktops
Disaggregation of revenue
Net sales	85,577	70,554	150,479	133,875
Software
Disaggregation of revenue
Net sales	68,974	64,448	132,296	148,175
Servers/Storage
Disaggregation of revenue
Net sales	63,387	53,269	105,871	100,054
Net/Com Products
Disaggregation of revenue
Net sales	53,264	79,544	100,676	141,700
Displays and Sound
Disaggregation of revenue
Net sales	73,991	67,761	137,610	130,496
Accessories
Disaggregation of revenue
Net sales	78,778	84,089	158,279	173,891
Other Hardware/Services
Disaggregation of revenue
Net sales	55,049	63,980	104,565	121,988
Enterprise Solutions
Disaggregation of revenue
Net sales	298,808	287,153	581,467	601,096
Enterprise Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	89,802	87,590	180,033	201,908
Enterprise Solutions \| Desktops
Disaggregation of revenue
Net sales	52,680	33,572	90,717	63,714
Enterprise Solutions \| Software
Disaggregation of revenue
Net sales	21,628	17,561	48,748	56,795
Enterprise Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	15,691	18,705	28,058	31,212
Enterprise Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	19,107	28,727	39,069	49,259
Enterprise Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	37,265	27,322	68,529	54,042
Enterprise Solutions \| Accessories
Disaggregation of revenue
Net sales	38,645	41,095	80,177	88,689
Enterprise Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	23,990	32,581	46,136	55,477
Business Solutions
Disaggregation of revenue
Net sales	278,198	261,027	534,067	534,141
Business Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	97,841	88,081	189,997	183,000
Business Solutions \| Desktops
Disaggregation of revenue
Net sales	20,105	19,011	38,223	37,773
Business Solutions \| Software
Disaggregation of revenue
Net sales	37,775	33,828	68,427	68,404
Business Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	34,056	22,605	55,667	46,896
Business Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	19,845	28,584	41,690	56,888
Business Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	19,981	23,654	41,733	46,467
Business Solutions \| Accessories
Disaggregation of revenue
Net sales	28,663	26,506	59,036	55,241
Business Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	19,932	18,758	39,294	39,472
Public Sector Solutions
Disaggregation of revenue
Net sales	159,473	185,367	252,970	325,855
Public Sector Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	69,816	74,231	108,698	126,005
Public Sector Solutions \| Desktops
Disaggregation of revenue
Net sales	12,792	17,971	21,539	32,388
Public Sector Solutions \| Software
Disaggregation of revenue
Net sales	9,571	13,059	15,121	22,976
Public Sector Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	13,640	11,959	22,146	21,946
Public Sector Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	14,312	22,233	19,917	35,553
Public Sector Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	16,745	16,785	27,348	29,987
Public Sector Solutions \| Accessories
Disaggregation of revenue
Net sales	11,470	16,488	19,066	29,961
Public Sector Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	$ 11,127	$ 12,641	$ 19,135	$ 27,039

REVENUE - Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Change in contract liability
Beginning balance - Contract liability	$ 4,206	$ 4,266
Cash received in advance and not recognized as revenue	9,769	11,980
Amounts recognized as revenue as performance obligations satisfied	(6,875)	(9,683)
Ending balance - Contract liability	7,100	$ 6,563
Accrued expenses and other liabilities
Contract liabilities
Contract liabilities	$ 7,100		$ 4,206

FAIR VALUE MEASUREMENTS - Available-for-Sale Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Cash equivalents and short-term investments
Amortized Cost	$ 365,837	$ 281,252
Unrealized Gains	11	103
Unrealized Losses	(141)
Fair Value	$ 365,707	$ 281,355
Fair value hierarchy - Level 1	us-gaap:FairValueInputsLevel1Member	us-gaap:FairValueInputsLevel1Member
Money market funds \| Cash and cash equivalents
Cash equivalents and short-term investments
Amortized Cost	$ 108,117	$ 129,123
Fair Value	108,117	129,123
U.S. Government treasury securities \| Short-term investments
Cash equivalents and short-term investments
Amortized Cost	257,720	152,129
Unrealized Gains	11	103
Unrealized Losses	(141)
Fair Value	$ 257,590	$ 152,232

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator:
Net Income (Loss)	$ 26,161	$ 19,697	$ 39,315	$ 33,895
Denominator:
Denominator for basic earnings per share	26,348,000	26,256,000	26,355,000	26,291,000
Dilutive effect of unvested employee stock awards	172,000	109,000	167,000	109,000
Denominator for diluted earnings per share	26,520,000	26,365,000	26,522,000	26,400,000
Earnings per share:
Basic	$ 0.99	$ 0.75	$ 1.49	$ 1.29
Diluted	$ 0.99	$ 0.75	$ 1.48	$ 1.28
Additional Disclosure
Employee stock awards excluded from computation of diluted earnings per share	0	0	0	0

LEASES - Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) lease	Jun. 30, 2023 USD ($)
Leases
Number of additional operating or financing leases not yet commenced \| lease			0
Lease Cost
Capitalized operating lease cost	$ 485	$ 904	$ 944	$ 1,926
Short-term lease cost	561	222	1,122	350
Total lease cost	1,046	1,126	2,066	2,276
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 532	$ 916	$ 977	$ 1,872
Weighted-average remaining lease term - Capitalized operating leases (in years)	2 years 5 months 4 days	3 years 3 months 29 days	2 years 5 months 4 days	3 years 3 months 29 days
Weighted-average discount rate - Capitalized operating leases	4.21%	4.04%	4.21%	4.04%
Related Parties
Lease Cost
Capitalized operating lease cost		$ 314		$ 627
Short-term lease cost	$ 421	107	$ 841	214
Total lease cost	$ 421	421	$ 841	841
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows		$ 314		$ 627
Weighted-average remaining lease term - Capitalized operating leases (in years)		5 months 1 day		5 months 1 day
Weighted-average discount rate - Capitalized operating leases	3.92%	3.92%	3.92%	3.92%
Others
Lease Cost
Capitalized operating lease cost	$ 485	$ 590	$ 944	$ 1,299
Short-term lease cost	140	115	281	136
Total lease cost	625	705	1,225	1,435
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 532	$ 602	$ 977	$ 1,245
Weighted-average remaining lease term - Capitalized operating leases (in years)	2 years 5 months 4 days	3 years 7 months 2 days	2 years 5 months 4 days	3 years 7 months 2 days
Weighted-average discount rate - Capitalized operating leases	4.28%	4.06%	4.28%	4.06%

LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Future lease payments over the remaining term of capitalized operating leases
2024, excluding the six months ended June 30, 2024	$ 1,107
2025	1,980
2026	1,205
2027	237
2028	161
Total	4,690
Imputed interest	(231)
Lease liability balance	4,459
Right-of-use assets	3,917	$ 4,340
Long-term lease liability	2,497	3,181
Short-term lease liability	$ 1,962	$ 1,733
Short-term 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
2024, excluding the six months ended June 30, 2024	$ 713
2025	163
2026	163
2027	1
Total	1,040
Others
Future lease payments over the remaining term of capitalized operating leases
2024, excluding the six months ended June 30, 2024	394
2025	1,817
2026	1,042
2027	236
2028	161
Total	$ 3,650

SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($) segment	Jun. 30, 2023 USD ($) segment	Jun. 30, 2024 USD ($) segment	Jun. 30, 2023 USD ($) segment	Dec. 31, 2023 USD ($)
Segment Reporting Information
Number of reportable segments \| segment	3	3	3	3
Number of operating segments \| segment	3	3	3	3
Net sales:
Net sales	$ 736,479	$ 733,547	$ 1,368,504	$ 1,461,092
Operating income (loss):
Operating income (loss)	30,919	25,071	44,383	43,188
Interest income, net	4,649	1,874	9,216	3,160
Income before taxes	35,568	26,945	53,599	46,348
Depreciation and amortization:
Depreciation and amortization	3,273	3,094	6,539	6,167
Total assets:
Total assets	1,283,485	1,164,275	1,283,485	1,164,275	$ 1,188,381
Enterprise Solutions
Net sales:
Net sales	298,808	287,153	581,467	601,096
Business Solutions
Net sales:
Net sales	278,198	261,027	534,067	534,141
Public Sector Solutions
Net sales:
Net sales	159,473	185,367	252,970	325,855
Operating Segments \| Enterprise Solutions
Net sales:
Net sales	298,808	287,153	581,467	601,096
Operating income (loss):
Operating income (loss)	10,230	7,511	16,077	14,033
Depreciation and amortization:
Depreciation and amortization	221	423	426	847
Total assets:
Total assets	729,450	678,104	729,450	678,104
Operating Segments \| Business Solutions
Net sales:
Net sales	278,198	261,027	534,067	534,141
Operating income (loss):
Operating income (loss)	22,229	18,831	38,018	35,384
Depreciation and amortization:
Depreciation and amortization	147	158	310	317
Total assets:
Total assets	537,655	472,566	537,655	472,566
Operating Segments \| Public Sector Solutions
Net sales:
Net sales	159,473	185,367	252,970	325,855
Operating income (loss):
Operating income (loss)	2,714	1,650	(2,636)	1,679
Depreciation and amortization:
Depreciation and amortization	23	20	46	39
Total assets:
Total assets	107,382	102,652	107,382	102,652
Headquarters/Other
Operating income (loss):
Operating income (loss)	(4,254)	(2,921)	(7,076)	(7,908)
Depreciation and amortization:
Depreciation and amortization	2,882	2,493	5,757	4,964
Total assets:
Assets net of intercompany balance eliminations	(91,002)	(89,047)	(91,002)	(89,047)
Intersegment Elimination
Total assets:
Total assets	$ (59,751)	$ (55,432)	$ (59,751)	$ (55,432)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
Accumulated Other Comprehensive Income (Loss)
Balance at beginning of period	$ 81
Other comprehensive income (loss) before reclassifications, net of tax	(158)
Less amounts reclassified from accumulated other comprehensive income (loss), net of tax	26
Net other comprehensive income (loss)	(184)
Balance at end of period	$ (103)

BANK BORROWINGS (Details) - USD ($) $ in Thousands	6 Months Ended
BANK BORROWINGS (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023
Subordinated Borrowing
Line of credit, borrowing capacity	$ 50,000	$ 50,000
Credit facility, expiration date	Mar. 31, 2025
Line of credit, maximum borrowing capacity	$ 80,000
Debt instrument, interest rate	8.50%
Debt instrument, variable interest rate, type	us-gaap:PrimeRateMember
Proceeds from short-term borrowings	$ 10,560	67,895
Line of credit, outstanding borrowing	0	0
Line of credit, available for borrowing	$ 50,000	$ 50,000
Maximum
Subordinated Borrowing
Debt ratio	2.0

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