PC Connection (CNXN) Sidoti September Small-Cap Virtual Conference summary

Company overview and culture

• Founded in 1982, with 2,600 employees and $736 million in quarterly net sales.

• Mission centers on connecting customers with technology to drive growth and innovation.

• Focus on customer service, with a 97.9% retention rate for high-spending clients.

• Recognized for excellence by Time, Newsweek, and Forbes in 2024.

• Net Promoter Score of 79, with significant investment in employee training and certifications.

Business model and strategy

• Operates through three main customer segments: enterprise, SMB, and public sector.

• Centralized operations support specialized sales subsidiaries and vertical market teams.

• Offers global procurement and professional services, including AI, cloud, and cybersecurity.

• Manages over 460,000 SKUs from 1,600+ manufacturers, providing end-to-end IT solutions.

• Lifecycle practice integrates cloud, cybersecurity, and managed services for seamless delivery.

Financial performance and shareholder returns

• Gross profit grew 22% since 2022; operating income up 43%, net income and EPS up 49%.

• Q2 2024 marked record EPS; gross profit up 59% and net income up 242% since Q2 2020.

• Strong cash flow, with $188 million in free cash flow and disciplined working capital management.

• Revenue split: 40% enterprise, 40% SMB, 20% public sector; SMB has highest margins.

• $85 million returned to shareholders since 2020 via dividends and buybacks; dividend increased 25% in 2023.