PC Connection, Inc.

Good afternoon and welcome to the second quarter 2025 connection earnings conference call. My name is Liz and I will be the coordinator for today. At this time, all participants are in 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 or 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.

Thank you, 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 provisions 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, 2024, 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, 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 second quarter 2025 comparisons are being made against the second quarter 2024. Today's call is being webcast and will be available on Connection'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 at www.ir.connection.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 Q2 2025 Conference Call. I'll begin this afternoon with an overview of our second quarter results and highlights of our performance. Tom will then walk us through a more detailed look at our financials. The second quarter marks our fifth consecutive quarter of year-over-year revenue growth. We executed well in this dynamic technology landscape, and we remain focused on driving extraordinary value through the delivery of integrated IT solutions and outstanding customer service. Net sales were $759.7 million in the second quarter, an increase of 3.2% over last year. We continue to see momentum with mobility and desktop categories as our sales increased 6% year over year and 5% on a sequential basis, driven by Windows 11 refresh and demand for AI PCs. Revenue for advanced technologies and integrated solutions increased by 3% due to sales of server storage and networking solutions as customers are investing in data center refresh server consolidation, and edge computing. Gross profit increased to a record 137.8 million, while gross margins were down to 18.1%, 40 basis points below last year. Gross profit was favorably affected by an increase in sales. However, the gross margin percentage declined due to changes in partner subscription licensing programs. Despite these changes, Operating income remained flat at $30.9 million year-over-year. Net income for Q2 was $24.8 million, down 5.2 percent, compared to $26.2 million in the prior year. We will now look a little deeper into our segment performance. In our business solution segment, Q2 net sales were $293.2 million, an increase of 5.4 percent compared to the prior year. Gross profit increased by 3.8% to $68.8 million. Gross margin decreased 30 basis points compared to the prior year quarter to 23.5%. The decline in gross margin was due to the reduction in subscription licensing programs. In our public sector solution business, Q2 net sales were $140.5 million, 11.9% lower than a year ago. Sales to the federal government increased by $1.9 million, while sales to state, local government, and educational institutions decreased by $20.9 million. Sales to state, local government, and higher education institutions increased modestly, offset by a decrease in K-12 sales. Gross profit for the public sector segment was $21.3 million, a decrease of 11.9% compared to Q2-24. Gross margin remained flat at 15.2% for the quarter compared to the prior year. In our enterprise solution segment, Q2 net sales grew 9.1% to $326 million compared to last year. The increase in net sales was driven equally by advanced technologies and endpoint devices. Gross profit for the enterprise segment was $47.6 million, 3.4% higher than the prior year. Gross margin decreased by 80 basis points to 14.6% for the quarter. The margin decrease was the result of changes in subscription license programs and netted software sales. 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? Thanks, Tim.