MERRIMACK, N.H.--(BUSINESS WIRE)--January 28, 2016--PC Connection, Inc. (NASDAQ: PCCC):

PC Connection, Inc. (NASDAQ: PCCC), a national provider of a full range of information technology (IT) solutions to business, government, healthcare, and education markets, today announced record results for the quarter ended December 31, 2015. Net sales for the fourth quarter of 2015 increased by 8.5% to $684.3 million, compared to $630.8 million for the prior year quarter. Net income for the quarter ended December 31, 2015 increased by 14.0% to $13.6 million, or $0.51 per diluted share, compared to net income of $11.9 million, or $0.45 per diluted share for the prior year quarter.

Net sales for the year ended December 31, 2015 were $2.57 billion, an increase of $110.6 million or 4.5%, compared to $2.46 billion for the year ended December 31, 2014. Net income for the year ended December 31, 2015 increased by 9.7% to $46.8 million, or $1.76 per diluted share, compared to net income of $42.7 million, or $1.61 per diluted share, for the year ended December 31, 2014. Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense (“Adjusted EBITDA”) totaled $88.5 million for 2015, compared to $80.5 million for 2014.

Overall gross profit increased by $8.7 million, or 10.5%, in the fourth quarter of 2015, compared to the prior year quarter. Consolidated gross margin, as a percentage of net sales, increased to 13.4% in the fourth quarter of 2015, compared to 13.2% for the prior year quarter.

Selling, general and administrative dollars increased in the fourth quarter of 2015 to $69.0 million from $63.0 million in the prior year quarter and slightly increased as a percentage of net sales to 10.1% from 10.0%. Included in these totals were $0.3 million of start-up and transition costs related to our new advanced configuration and distribution center, which was operational at the end of the third quarter. We continue to invest in technical solution sales capabilities and expect SG&A expenses to rise accordingly. However, we are highly focused on improving efficiencies and streamlining wherever possible.

The Company generated significant cash flow during the year ended December 31, 2015. Total cash was $80.2 million at December 31, 2015, compared to $60.9 million at December 31, 2014. In January 2016, we paid a 40 cent per share special dividend to shareholders, which totaled $10.6 million. Days sales outstanding were 44 days at December 31, 2015, and inventory turns were 22 turns in the fourth quarter of 2015.

“The Company had record performance in both net sales and net income this quarter and for the year ended December 31, 2015. We were able to increase sales and earnings, while continuing to make investments to strengthen our capabilities as a leading National Solutions Provider,” said Timothy McGrath, President and Chief Executive Officer. “Also, for the fifth consecutive year, we paid a special dividend to shareholders. We believe our team and the strategies we have in place position us well to gain market share and increase long-term shareholder value.”

Adjusted EBITDA is a non-GAAP financial measure. This information is included to provide information with respect to the Company’s operating performance and earnings.

PC Connection, Inc., a Fortune 1000 company, has three wholly owned sales subsidiaries: PC Connection Sales Corporation, MoreDirect, Inc., and GovConnection, Inc., headquartered in Merrimack, NH; Boca Raton, FL; and Rockville, MD; respectively. All three companies can deliver custom-configured computer systems overnight from our ISO 9001:2008 certified technical configuration lab at our distribution center in Wilmington, OH. In addition, the company has over 2,500 technical certifications to ensure that we can solve the most complex issues of our customers. Investors and media can find more information about PC Connection, Inc. at http://ir.pcconnection.com.

PC Connection Sales Corporation (800-800-5555), the original business of PC Connection, Inc. serving primarily the small- and medium-sized business sector, is a rapid-response provider of IT products and services. It offers more than 300,000 brand-name products through its staff of technically trained sales account managers, catalogs, publications, and its website at www.pcconnection.com. This company also serves consumer and small office users and is, under its MacConnection brand (800-800-2222), one of Apple’s largest authorized online resellers at www.macconnection.com.

MoreDirect, Inc. (561-237-3300), www.moredirect.com, provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and access to over 300,000 products and 1,600 vendors through TRAXX™, our proprietary cloud-based eProcurement system. MoreDirect’s team of engineers, software licensing specialists, and project managers help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle.

GovConnection, Inc. (800-800-0019) is a rapid-response provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, catalogs, publications, and online at www.govconnection.com.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of changes in market demand and the overall level of economic activity and environment, or in the level of business investment in information technology products, competitive products and pricing, product availability and market acceptance, new products, fluctuations in operating results, and the ability of the Company to manage costs in response to fluctuations in revenue, and other risks that could cause actual results to differ materially from expectations, including those detailed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2014. More specifically, the statements in this release concerning the Company’s outlook for selling, general, and administrative expenses, the Company’s efforts in improving efficiencies and streamlining its business and other statements of a non-historical basis (including statements regarding the Company’s ability to increase market share and enhance long-term shareholder value and the Company’s continuing investments in technical solution sales capabilities) are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, the continued acceptance of the Company's distribution channel by vendors and customers, continuation of key vendor and customer relationships and support programs, the ability of the Company to gain or maintain market share, and the ability of the Company to hire and retain qualified sales representatives and other essential personnel. The Company disclaims any obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise.


CONSOLIDATED SELECTED FINANCIAL INFORMATION
At or for the Three Months Ended December 31,	2015					2014
											%
(Amounts and shares in thousands, except operating data, P/E ratio, and per share data)											Change

Operating Data:
Net sales	$	684,323				$	630,765				8	%
Diluted earnings per share	$	0.51				$	0.45				13	%

Gross margin		13.4	%				13.2	%
Operating margin		3.3	%				3.2	%
Return on equity ⁽¹⁾		12.5	%				12.5	%

Inventory turns		22					26
Days sales outstanding		44					40

	% of					% of
Product Mix:	Net Sales					Net Sales
Notebooks/Mobility		20	%				20	%
Software		20					18
Servers/Storage		12					14
Net/Com Products		10					10
Other Hardware/Services		38					38
Total Net Sales		100	%				100	%


Stock Performance Indicators:
Actual shares outstanding		26,498					26,343
Total book value per share	$	14.81				$	13.44
Tangible book value per share	$	12.81				$	11.42
Closing price	$	22.64				$	24.55
Market capitalization	$	599,915				$	646,721
Trailing price/earnings ratio		12.9					15.3
LTM Adjusted EBITDA ⁽²⁾	$	88,509				$	80,475
Adjusted market capitalization/LTM Adjusted EBITDA ⁽³⁾		5.9					7.3

(1) Based on last twelve months' net income.
(2) Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation.
(3) Adjusted market capitalization is defined as gross market capitalization less cash balance.


REVENUE AND MARGIN INFORMATION
For the Three Months Ended December 31,	2015					2014
	Net			Gross		Net			Gross
(amounts in thousands)	Sales			Margin		Sales			Margin

SMB	$	262,646		15.9	%	$	261,661		15.2	%
Large Account		276,980		11.6			225,609		11.6
Public Sector		144,697		12.3			143,495		11.9
Total	$	684,323		13.4	%	$	630,765		13.2	%


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended December 31,	2015					2014
(amounts in thousands, except per share data)	Amount			% of Net Sales		Amount			% of Net Sales

Net sales	$	684,323		100.0	%	$	630,765		100.0	%
Cost of sales		592,472		86.6			547,641		86.8
Gross profit		91,851		13.4			83,124		13.2

Start-up costs - new distribution center		296		–			–		–
Selling, general and administrative expenses, other		68,664		10.1			63,035		10.0
Income from operations		22,891		3.3			20,089		3.2

Interest/other expense, net		(20	)	–			(14	)	–
Income tax provision		(9,258	)	(1.3	)		(8,131	)	(1.3	)
Net income	$	13,613		2.0	%	$	11,944		1.9	%

Earnings per common share:
Basic	$	0.51				$	0.45
Diluted	$	0.51				$	0.45

Shares used in the computation of earnings per common share:
Basic		26,459					26,311
Diluted		26,632					26,554



CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,	2015					2014
(amounts in thousands, except per share data)	Amount			% of Net Sales		Amount			% of Net Sales

Net sales	$	2,573,973		100.0	%	$	2,463,339		100.0	%
Cost of sales		2,232,954		86.8			2,139,950		86.9
Gross profit		341,019		13.2			323,389		13.1

Start-up costs - new distribution center		1,026		–			–		–
Selling, general and administrative expenses, other		261,439		10.2			251,935		10.2
Income from operations		78,554		3.0			71,454		2.9

Interest/other expense, net		(87	)	–			(86	)	–
Income tax provision		(31,640	)	(1.2	)		(28,687	)	(1.2	)
Net income	$	46,827		1.8	%	$	42,681		1.7	%

Earnings per common share:
Basic	$	1.77				$	1.63
Diluted	$	1.76				$	1.61

Shares used in the computation of earnings per common share:
Basic		26,398					26,246
Diluted		26,616					26,512


EBITDA AND ADJUSTED EBITDA

A reconciliation of EBITDA and Adjusted EBITDA is detailed below. Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either includes or excludes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance including our ability to fund our future capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreements.

(amounts in thousands)	Three Months Ended December 31,						Years Ended December 31,
	2015		2014		% Change		2015			2014			% Change
Net income	$	13,613	$	11,944			$	46,827		$	42,681
Depreciation and amortization		2,364		2,095				8,961			8,092
Income tax expense		9,258		8,131				31,640			28,687
Interest/other expense, net		20		14				87			86
EBITDA		25,255		22,184				87,515			79,546
Stock-based compensation		274		228				994			929
Adjusted EBITDA	$	25,529	$	22,412	14	%	$	88,509		$	80,475		10	%



							December 31,			December 31,
CONDENSED CONSOLIDATED BALANCE SHEETS							2015			2014
(amounts in thousands)

ASSETS
Current Assets:
Cash and cash equivalents							$	80,188		$	60,909
Accounts receivable, net								356,145			293,027
Inventories								102,780			90,917
Deferred income taxes								7,909			7,749
Prepaid expenses and other current assets								4,254			5,332
Income taxes receivable								1,575			212
Total current assets								552,851			458,146
Property and equipment, net								32,227			27,861
Goodwill								51,276			51,276
Other intangibles, net								1,668			1,953
Other assets								1,052			724
Total Assets							$	639,074		$	539,960

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable							$	166,516		$	124,893
Accrued expenses and other liabilities								36,207			22,011
Accrued payroll								19,280			17,793
Total current liabilities								222,003			164,697
Deferred income taxes								21,615			18,803
Other liabilities								3,005			2,452
Total Liabilities								246,623			185,952
Stockholders’ Equity:
Common stock								284			282
Additional paid-in capital								109,161			106,956
Retained earnings								298,868			262,632
Treasury stock at cost								(15,862	)		(15,862	)
Total Stockholders’ Equity								392,451			354,008
Total Liabilities and Stockholders’ Equity							$	639,074		$	539,960


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,		2015			2014
(amounts in thousands)
Cash Flows from Operating Activities:
Net income	$	46,827		$	42,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,961			8,092
Provision for doubtful accounts		1,097			1,383
Stock-based compensation expense		994			929
Deferred income taxes		2,652			1,212
Loss on disposal of fixed assets		44			14
Excess tax benefit from exercise of equity awards		(552	)		(556	)

Changes in assets and liabilities:
Accounts receivable		(64,215	)		(11,359	)
Inventories		(11,863	)		(11,776	)
Prepaid expenses and other current assets		(285	)		1,829
Other non-current assets		(328	)		(4	)
Accounts payable		41,324			202
Accrued expenses and other liabilities		6,206			2,751
Net cash provided by operating activities		30,862			35,398

Cash Flows from Investing Activities:
Purchases of equipment		(12,337	)		(7,609	)
Purchase of intangible asset		(450	)		-
Proceeds from sale of equipment		-			13
Net cash used for investing activities		(12,787	)		(7,596	)

Cash Flows from Financing Activities:
Dividend payment		-			(10,527	)
Issuance of stock under Employee Stock Purchase Plan		875			753
Excess tax benefit from exercise of equity awards		552			556
Exercise of stock options		437			356
Payment of payroll taxes on stock-based compensation through shares withheld		(660	)		(578	)
Net cash provided by (used for) financing activities		1,204			(9,440	)
Increase in cash and cash equivalents		19,279			18,362
Cash and cash equivalents, beginning of period		60,909			42,547
Cash and cash equivalents, end of period	$	80,188		$	60,909

Non-cash Investing Activities:
Dividend declaration	$	10,591		$	-
Accrued capital expenditures	$	504		$	205

Supplemental Cash Flow Information:
Income taxes paid	$	30,371		$	24,219

CONTACT:
PC Connection, Inc.
Joseph Driscoll, 603-683-2505
Senior Vice President, Treasurer and Chief Financial Officer


FOURTH QUARTER SUMMARY:					FULL YEAR SUMMARY:

Net income up 14% y/y Net sales: $684.3 million, up 8.5% y/y Diluted EPS: $0.51, up 13% y/y					Net income up 10% y/y Net sales: $2.57 billion, up 4.5% y/y Diluted EPS: $1.76, up 9% y/y