PC Connection, Inc.

Please continue to stand by, and thank you for your patience. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good afternoon, and welcome to the fourth quarter 2021 Connection Earnings Conference Call. My name is Justin, and I will be the coordinator for today. At this time, all participants are in a listen-only mode. Following the paired remarks, there will be a question and answer session. As a reminder, the conference call is the property of Connection and may not be recorded or rebroadcast without a specific permission from the company. On the call today are Tim McGrath, President and Chief Executive Officer, and Tom Baker, Senior Vice President and Chief Financial Officer. I will now turn the call over to the company.

Thanks, Operator, and good afternoon, everyone. I will now read our cautionary note regarding forward-looking statements. Any statements or references made during the conference call that are not statements of historical fact may be deemed to be forward-looking statements. Various remarks that management may make about the company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements. as a result of various important factors, including those discussed in the risk factors section of the company's annual report on Form 10-K for the year ended December 31, 2020, which is on file with the Securities and Exchange Commission, as well as in other documents that the company files with the Commission from time to time. In addition, any forward-looking statements represent management's view as of today and should not be relied upon as representing views as of any subsequent date. While the company may elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so other than as required by law, even if estimates change. And therefore, you should not rely on these forward-looking statements as representing management's views as of any date subsequent to today. During this call, GAAP and non-GAAP financial measures will be discussed. A reconciliation between the two is available in today's earnings release and on the company's website, at www.connections.com. Please note that unless otherwise stated, all references to fourth quarter 2021 comparisons are being made against the fourth quarter of 2020. Today's call is being webcast and will be available on Connections' website. The earnings release will be available on the SEC website at www.sec.gov and in the investor relations section of our website at www.connections.com. I would now like to turn the call over to our host, Tim McGrath, President and CEO. Tim?

Thank you, Samantha. Good afternoon, everyone, and thank you for joining us today for Connections Q4 2021 Conference Call. I'll begin this afternoon with an overview of our fourth quarter results, highlights of our performance, and then share our updated thoughts on 2022. Tom will walk us through a more detailed look at our financials and our capital allocation strategy. We are pleased to announce another record quarter. Revenue and gross profits for the fourth quarter were the highest in the company's history. These results demonstrate the continued execution of our business strategy to connect our customers with technology that enhances growth, elevates productivity, and empowers innovation. A number of factors contributed to our strong performance, including our continued focus on helping our customers navigate and optimize their supply chain needs. In addition, we saw strong demand across the majority of our customer base. Our commitment to helping customers accomplish their work-from-anywhere initiatives and our continued focus on cloud and data center transformation helped to drive these record Q4 revenues. On a consolidated basis, Q4 revenue grew by 18.4 percent compared to last year's fourth quarter. Looking at our segments, the enterprise segment grew 33.4 percent, business solutions grew 14.4 percent, while the public sector declined 4.1 percent. The supply chain issues that we referenced in past quarters have persisted throughout Q4. Consequently, our backlog increased slightly quarter over quarter. Our team has continued to leverage our capabilities and scale to navigate the ongoing supply constraints on behalf of our customers. However, the supply chain has yet to recover to the point that it can consistently fulfill the demand of our customers on a timely basis. We anticipate some of these challenges will persist through the first half of 2022. Our loyal customers know that we have the expertise, scale, and capacity to secure and store product on their behalf. Consequently, our inventory levels have increased slightly in the fourth quarter when compared to the third quarter. We delivered strong growth across all of our vertical markets. Our healthcare vertical, which is our largest vertical, grew 29% year over year. while our retail and finance verticals grew 31% and 14% respectively. Now let's discuss our Q4 performance in a little greater detail. As I stated earlier, fourth quarter revenue was up 18.4% to $800.2 million from 2020, while gross profit was up 16.7% to $127 million. Gross margins were 15.9%, down 23 basis points from Q4 2020. The decrease in margin resulted from the enterprise segment comprising 46% of consolidated revenue versus 41% in the prior year. Additionally, margins were impacted from a higher mix of endpoint devices. Operating income in Q4 was $31.3 million, an increase of 58.4% or 3.9% of net sales compared to 19.8 million or 2.9% of net sales in the prior year quarter. In Q4 2021, diluted earnings per share was $0.85, an increase of 37.1% from $0.62 in Q4 2020. We ended Q4 with $108.3 million of cash and cash equivalents. We'll now look a little deeper into segment performance. In our business solution segment, our Q4 net sales hit an all-time record of $303.5 million, an increase of 14.4% compared to $265.2 million a year ago. Gross profit in the business solution segment was $58 million, an increase of 14.4% from a year ago. Gross margin remained flat at 19.1 percent in the quarter compared to the prior year. In our public sector solutions business, Q4 net sales were 129.4 million, a decrease of 4.1 percent compared to 134.9 million a year ago. Sales to state and local government and educational institutions were 103.6 million, an increase of 9.1 percent compared to the prior year. Sales to federal government were $25.8 million, a decrease of 35.3% compared to the prior year, primarily due to the timing of project rollouts. Gross profit for the public sector segment was $18.6 million, an increase of 1% compared to Q4-20. Gross margin increased by 69 basis points to 14.4%, primarily due to changes in products and customer mix. In our enterprise solution segment, Q4 net sales hit a record $367.3 million, an increase of 33.3% compared to $275.6 million a year ago. Gross profit for the enterprise segment was $50.5 million, an increase of 27.1% in the quarter. Gross margin for the quarter decreased by 67 basis points to 13.7%. The decrease in gross margin percentage was primarily due to a higher mix of endpoint devices. We've continued to see strong growth in the enterprise solution segment. Our customers need to manage and secure endpoints, and a work-from-anywhere environment helps to fuel our growth. I'll now turn the call over to Tom to discuss additional financial highlights from our income statement, balance sheet, and cash flow statement. Tom?