PC Connection, Inc.

Good afternoon, and welcome to the third quarter 2025 Connection Earnings Conference Call. My name is Marvin, and I'll be the coordinator for today. At this time, all participants are in listen-only mode following the prepared answer session. As a reminder, this conference call is a property of Connection. It may not be recorded or reprocast without specific permissions. On the call today are Tim McGrath, President and Chief Executive Officer, and Tom Baker, Senior Vice President and Chief Financial Officer. I'll 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 from 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.connections.com. Please note that unless otherwise stated, all references to third quarter 2025 comparisons are being made against the third quarter of 2024. Today's call is being webcast and will be available on Connection's website. The earnings release will be available on the FTC website at www.fcc.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 Q3 2025 conference call. I'll begin this afternoon with an overview of our third quarter results and highlights of our performance. Then Tom will walk us through a more detailed look at our financials. I'm pleased to share that our third quarter was another solid one for the company. We continued to execute well, delivered record gross profit, and expanded our margins, despite some expected headwinds in parts of the business. Our overall results this quarter highlight our success in higher value solutions, deeper customer relationships, and consistent operational executions. Let's start with the overall results. Gross profit increased 2.4% year over year to $138.6 million, the highest in our company's history. Gross margin expanded 90 basis points to 19.6%, driven by strong growth in cloud software, cybersecurity, and services, all recognized on a net basis. Our business solutions and enterprise solutions segments both performed well, with gross profit up 7.8% and 3.4% respectively. As anticipated, the public sector business experienced some challenges this quarter, given the timing of some large federal projects and ongoing funding uncertainty at the federal, state, and local levels. We believe the budget issues have caused a temporary pause not a shift in our long-term demand. Total net sales were 709.1 million, down 2.2% from last year. The decline is largely the result of a decrease in net sales in the public sector solution segment, driven by large federal projects previously mentioned that did not repeat in Q3. If you exclude those, underlying sales were healthy, especially in cloud storage, and services. Now let's take a look at the segments. In business solutions, we saw another strong performance. Net sales grew 1.7% to $256.8 million, while gross profit increased 7.8% to $68 million. Gross margin reached a record 26.5%, up 150 basis points year over year. These results reflect the continued strength of our cloud and cybersecurity offerings, two areas in which we've built recurring profitable revenue streams. In public sector solutions, net sales were 132.5 million, down 24.3% from a year ago. The decline was driven by the timing of federal projects and reduced funding at the federal, state, and local levels. Even with lower revenue, gross margin increased 230 basis points to a record 17.2%, thanks to a higher mix of cloud and cybersecurity solution sales. Once funding cycles normalize, we expect this segment to rebound. And in enterprise solutions, net sales grew 7.7% to $319.8 million. led by strong demand for advanced technologies and endpoint devices. Gross profit was up 3.4% to $47.8 million. Gross margin came in at 14.9%, down slightly due to changes in subscription license programs and software mix. The important takeaway is that we're continuing to win business in high-growth areas, particularly in AI infrastructure, data center modernization, and edge computing. Turning to profitability, operating income was flat year over year, showing good cost discipline despite continued investments in areas of our business that will drive future growth. Net income was $24.7 million compared with $27.1 million last year, which included a one-time legal settlement and higher interest income. Delimit earnings per share came in at $0.97, down $0.05. while adjusted diluting earnings per share was also 97 cents, flat from the prior year, another sign of earning consistency despite the challenges in the public sector environment. Looking ahead, our strategy remains clear. We're focused on expanding our solutions-led business, deepening customer relationships, and driving profitable growth in cloud, cybersecurity, AI, and services. We're seeing strong engagement from customers who are modernizing their infrastructure and investing in AI-driven technologies. These are areas where we bring real customer value and where we expect to see continued momentum. While funding cycles and project timing can affect quarter-to-quarter results, we believe the long-term trends are all moving in the right direction. Our record gross profit expanding margins and growing base of recurring and solution-driven revenue give us confidence as we finish the year and head into 2026. 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?