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PC Connection, Inc. Reports Third Quarter Results

Total selling, general and administrative expenses for the quarter increased year over year by $1.4 million, or 2.5%, and increased as a percentage of net sales from 9.4% for the third quarter of 2011 to 10.0% for the third quarter of 2012. The percentage increase was primarily due to lower year-over-year sales. Tight cost control management led to a decline of $1.0 million in selling, general and administrative expenses from the second quarter of 2012, which represents a decrease of 53 basis points as a percentage of net sales. The Company is implementing a Customer Master Data Management system to enhance our capabilities and target additional selling opportunities which is scheduled to be placed into service in 2013. This will conclude the first phase of a comprehensive initiative to improve our internal IT infrastructure. Depreciation expense for this asset is expected to add approximately $2.0 million in SG&A expenses in 2013, which may increase our SG&A rates.

The Company generated significant positive cash flow in the nine months ended September 30, 2012. Total cash was $53.5 million compared to $4.6 million at December 31, 2011. In addition, there were no amounts outstanding on the Company’s line of credit at September 30, 2012, compared to $5.3 million outstanding at December 31, 2011. Days sales outstanding were 41 days at September 30, 2012, and inventory turns were 27 times as of September 30, 2012.

“During the quarter, we continued to strengthen our core and improve our profitability while facing weaker demand as a result of macro-economic uncertainty,” said Timothy McGrath, President and Chief Executive Officer. “As reported throughout the industry, the soft IT market is projected to continue throughout 2013. However, I am pleased with our growth in both gross margin and earnings this quarter. We believe our strong management team and business strategies have positioned us well to enhance long-term shareholder value even in this challenging marketplace.”

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