PC Connection, Inc.

Good afternoon, and welcome to the fourth quarter 2025 Connection Earnings Conference Call. My name is Lisa, and I will be the coordinator for the call 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 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. Please go ahead.

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 factor 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 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 fourth quarter 2025 comparisons are being made against the fourth 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.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 Q4 2025 conference call. I'll begin this afternoon with an overview of our fourth quarter results and highlights of our performance. Tom will then walk us through a more detailed look at our financials. I'm pleased to share that in the fourth quarter, we delivered record gross profit in our business solutions and enterprise solutions segments, as they each performed above our expectations. The results in our public sector segment were disappointing and below prior year levels. This was primarily due to a non-repeating project that straddled both Q4 2024 and Q1 2025. In addition, There was a delay in several K-12 project rollouts. The strong execution across our business solutions and enterprise solution segments drove gross profit performance, led by growth in software, including cloud and security, and supported by steady growth for endpoint devices. These results underscore the strength of our strategy, delivering higher value solutions driving long-term customer relationships, and executing with consistency and discipline. Beginning this quarter, we are disclosing gross billings, which represents the total dollar value of goods and services billed during the period, net of customer returns and credit memos, and any applicable sales or other taxes, and also includes agency fees and free. Gross billings increased by 2.9% to $1.06 billion compared to $1.03 billion from the prior year. The increase in gross billings demonstrates the overall growth in customer demand despite the headwinds experienced in the public sector. Now I'd like to highlight our consolidated performance. Gross profit increased 4.5% year over year to $135.6 million. Gross margin expanded 100 basis points to 19.3%, reflecting our disciplined approach to pricing as well as a shift in product and customer mix. Total net sales were 702.9 million, down 0.8% from last year due to the public sector challenges previously mentioned. Excluding these headwinds, underlying sales were healthy, especially in software, including cloud and security, endpoint devices, and displays. Now let's take a look at the segments. Business Solutions delivered a standout quarter with broad-based growth and meaningful margin expansion. Net sales increased 4.2% to $273.5 million, while gross profit rose 11.4% to $69.8 million. Gross billings grew 4.7% to $430.3 million, and gross margin expanded by 160 basis points year-over-year to 25.5%. These results reflect double-digit growth across desktops, notebooks, netcom, and software, including cloud and cybersecurity solutions. In public sector solutions, net sales were 90.8 million, down 36.8% from a year ago for the reasons previously mentioned. While the public sector business experienced some headwinds this quarter, we believe conditions will improve later in 2026. Growth billings declined 23.7% to 170.7 million, even with lower revenue Gross margin expanded 400 basis points to 19.4% due to changes in customer and product mix. Enterprise Solutions delivered robust top-line growth with net sales increasing 11.9% to 338.7 million, driven by strong demand for advanced technologies and endpoint devices. Gross profit grew 7.1% to $48.2 million, while gross billings increased 16.1% to $457.8 million. Gross margin was 14.2%, down 70 basis points year over year, reflecting changes in subscription license programs and product mix. We continue to focus on operational efficiencies and expense management. In the quarter, we executed a voluntary retirement offering for our tenured employees. These associated charges are reflected in the severance expenses and other charges in the income statement. This, in addition to severance charges in the quarter, totaled $3.1 million. Operating income was up 4.2% to $23.6 million. Excluding severance expenses and other charges, operating income was up 17.8% to 26.7 million compared to the prior year, underscoring our strong expense discipline while continuing to invest in areas of our business that will drive future growth. Diluted earnings per share were 82 cents, an increase of 5.1%, while adjusted diluted earnings per share was 91 cents, an increase of 16.7% compared to the prior year. Looking ahead, our strategy remains clear and unchanged, expanding our solutions-led business, deepening our customer relationships, and driving profitable growth in cloud, cybersecurity, AI, and services. We continue to see strong customer engagement as organizations modernize their infrastructure and invest in AI-driven technologies. These are several areas where we deliver differentiated value and where we expect sustained momentum. While funding cycles and project timing can impact quarter to quarter results, the long-term trends supporting our business remain firmly intact. With improved gross profit, expanding margins, and a growing base of reoccurring and solutions-driven revenue, we enter 2026 with confidence and strong strategic positioning. 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?