PC Connection reports a healthy 2014

Sales up 10.9% for the year, to $2.46 billion

PC Connection Inc. finished up a strong quarter and strong year with sales rising by about 10 percent and profits up by about 20 percent.

But don’t expect that to continue this year, the company warned in a Feb. 6 earnings call.

The Merrimack-based company reported net sales of $631 million for the fourth quarter ending Dec. 31, and $2.46 billion a year, up 9 and 10.9 percent, respectively. Net income – $11.9 million, or 45 cents a share for the quarter, and $42.7 million, or $1.61 per share for the year – also rose 21 and 20 percent, respectively.

Much of the growth, particularly in the first half of 2014, was driven by the expiration of Microsoft’s Windows XP operating system, which prompted many businesses to replace their aging personal computers, often with notebooks and tablets. Indeed, the laptop/notebook market, which represents a fifth of PC Connection’s sales, increased by 15 percent.

Sales were up across the board. A rebound in public sector spending helped increase networking sales by 19 percent. Sales to schools helped, thanks to the implementation of the Common Core standards. Large accounts fueled increase in storage and security.

The company, which started out selling computers by direct mail to individuals, is increasingly hiring engineers to help businesses with technological solutions, which means greater profit margins than just shipping computers. And that is what helped boost sales and profits in the fourth quarter, said CEO and president Tim McGrath.

But McGrath warned the XP replacement rush is over. Plus, the company will be investing in a new distribution center in Ohio, which would enable the company to do advanced configurations for large companies.

Thus expect “low-single-digit” revenue growth in 2015, in line with predictions that IT spending would only grow 3 percent that year, predicted McGrath. Earnings per share will be in the “mid-single-digit” range, he added.

He said key sectors include health care – now a $400 million business – the financial sector, retail, the “Internet of things” and energy.

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