PC Connection foresees growth as Microsoft provider

Addition of Softmart, increase in sales boost firm in second quarter

PC Connection, fresh off the acquisition of Softmart, announced a strong second quarter last week.

Ending on June 30, sales were up 7.7 percent to $676.2 million, resulting in a 7.1 percent increase in net income to $12.5 million, or 47 cents a share. Year-to-date sales were up 3.3 percent to almost $1.25 billion, and net income increased 6.5 percent to $21.5 million or 81 cents a share.

The total impact of the Softmart purchase, completed at the end of May, is not known yet. The Merrimack-based software and technical solutions company bought the firm – located outside Philadelphia and founded 35 years ago, the same age as PC Connection – because of its ties with Microsoft and its experience in cloud-based solutions.  

“The Softmart acquisition solidifies our position as one of Microsoft’s largest partners, and it provides us with enhanced cloud and services capabilities," said Timothy McGrath, president and CEO, adding in the conference call that it “makes us one of the top Microsoft partners in the world.”

In addition to spending $34 million in cash, which left PC Connection with $47 million in cash, the deal was responsible for most of the $800,000 in restructuring costs.   It is expected to add about $200 million in annual sales, but the companies only completed the acquisition with a month left to go in the quarter.

Its biggest impact would be in the small business segment, where quarterly sales increased 8.3 percent to $281 million, with nearly a 14 percent increase in gross profit.

But large accounts increased even more, 12 percent to $260 million. Public sector sales were flat at $136 million, though margins were up, and therefore so were profits by 13.7 percent.

In terms of product line, software sales jumped 35 percent, with growth in cloud-based offerings, securities and virtualization. The company’s largest category, notebook and mobility sales, was up by six percent.

In terms of vertical industry sales, health care revenue was up 19 percent, but the company also has high hopes for the manufacturing segment.

PC Connection closed at $26.15 on Monday, close to the company’s 52-week high of $27.50.