PC Connection continues solid performance

Notebooks now constitute almost a quarter of sales

PC Connection experienced a flat second quarter compared to last year, but last year was a pretty good.

Quarterly net income for the Merrimack technology equipment and service company was up only 2 percent to $11.6 million, or 44 cents a share, while sales – $627.6 million – was down 1 percent. That brings sales to $1.2 billion for the year – a 1.3 percent increase – with net income at $20.2 million (70 cents a share), which is almost a 9 percent increase.

That’s a far cry from the double digit growth the company was experiencing 2014, but still a “solid performance…in a challenging IT environment,” said Timothy McGrath, president and CEO. “We were able to increase earnings despite having to compare against the industry leading growth rates that we experienced in the prior year.”

With desktops on the decline – down 11 percent – the company’s largest selling item, notebooks, now constitute almost a quarter of the company sales. Notebooks increased 9 percent over last year.

The company’s small business segment was off by 3.3 percent, but large accounts were up 4.3 percent, particularly because of services and networking. The public sector was down, mainly because of a fall off in schools, but federal spending on technology increased, particularly when it came to buying notebooks. 

PC Connection – which started out as a catalog for computer hardware and software – has been trying to shift to a IT service company for businesses and institutions, primarily because of the higher margins. The goal is half of it’s business would come from such “advanced solutions.”  Right now, “we are sort of in the low 40 percent range,” said McGrath in an earnings calls transcribed by Seeking Alpha. A good acquisition might help it get there – the company now has $72.5 million in cash, compared to $60.9 million at the beginning of the year, but – while on the look out for a good fit – “at this time” has “no plans for an acquisition.”