PC Connection, Inc.

Good afternoon and welcome to the fourth quarter 2024 Connection Earnings Conference Call. My name is Josh and I will be the coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question and answer session. As a reminder, this conference call is the property of Connection and may not be recorded for rebroadcast without 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 factor section of the company's annual report on Form 10-K for the year ended December 31, 2023, 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 is 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, non-GAAP financial measures will be discussed. A reconciliation between any non-GAAP financial measure discussed and its most directly comparable GAAP measure is available in today's earnings release and on the company's website at www.connection.com. Please note that unless otherwise stated, all references to full year and fourth quarter 2024 comparisons are being made against the year ended December 31st, 2023 and the fourth quarter thereof. Today's call is being webcast and will be available on Connexion's website. The earnings release will be available on the SEC website at www.sec.gov and in the investor relations section of our website, www.ir.connexion.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 2024 conference call. I'll begin this afternoon with an overview of our 2024 performance, followed by our fourth quarter results. Tom will then walk us through a more detailed look at our financials. For the full year, revenue was $2.8 billion, a decrease of 1.7% compared to the prior year. while gross profit was $519.8 million, an increase of 1.6 percent. Gross margin was a record 18.6 percent, growing 60 basis points. Our SG&A was $422.3 million, an increase of 4 percent compared to the prior year. This increase was due to our investment in critical areas of our business, which we will discuss in detail later in the call. Net income was $87.1 million, an increase of 4.6% compared to the prior year. Earnings per diluted share was $3.29 for 2024 compared to $3.15 in the prior year. Now let's discuss our Q4 performance. Consolidated net sales were $708.9 million, an increase of 1.8% compared to the last year. Growth profit was flat at 129.8 million. Growth margins were down 30 basis points to 18.3% in Q4 compared to the prior year quarter, primarily due to a shift in product mix. Operating income in Q4 was 22.6 million, a decrease of 19% compared to Q4 2023. Operating income as a percent of sales was 3.2% compared to 4% in net sales in the prior year quarter. Net income in Q4 was $20.7 million, a decrease of 12.9% compared to $23.8 million in the prior year quarter. In Q4 2024, our diluted earnings per share was $0.78, a decrease of 12.8% from $0.90 in Q4 2023. Last quarter during our conference call, we noted that the recovery in IT spending was taking longer than we anticipated. This trend continued in Q4, which is reflected in our results. In Q4, we saw some evidence of a recovery year over year in select areas of our business. We experienced notebook mobility and desktop revenue growth of 14%, driven primarily by PC refresh initiatives by our customers. Revenue for advanced technologies continues to be challenged as customers wrestle with the timing of their AI deployment and data kind of refresh. Although our results for advanced technologies did not meet our expectations in Q4, we are cautiously optimistic about the future as we've seen a marked increase in our pipeline of opportunities. We'll now look a little deeper into our segment performance. In our business solution segment, our Q4 net sales were 262.4 million, 3.7% lower than a year ago, as we experienced a 12% decrease in the sale of advanced technology products, partially offset by an increase of 2% in endpoint devices. Gross profit for the business solution segment was 62.6 million, a decrease of 0.8%. Gross margin increased 70 basis points compared to the prior quarter to 23.9%. Our net sales and gross margins were favorably affected by customer mix and an increase in the mix of software recognized on a net basis. In our public sector solutions business, Q4 net sales were 143.7 million, 42.9% higher than a year ago. Sales to the federal government increased by $41.1 million, while sales to state and local government and educational institutions increased by $2 million. Gross profit for the public sector segment was $22.2 million, an increase of 30.2% compared to Q4 23. Gross margin decreased by 150 basis points to 15.4% for the quarter compared to the prior year. The revenue increase and margin decline resulted from a few large project rollouts in Q4 2024 that were at lower than average margins. In our enterprise solution segment, Q4 net sales were $302.7 million, 6.4% lower than a year ago, as we experienced an increase of 3% in device sales, offset by a 28% decrease in the sale of advanced technologies. Gross profit for the enterprise segment was $45 million, 9.3% lower than the prior year quarter. Gross margin decreased by 50 basis points to 14.9% for the quarter. The margin decrease was a result of lower software license fees and product mix. I'll now turn the call over to Tom to discuss additional financial highlights from our income statement, balance sheet, and cash flow statements. John? Thanks, Tim.