PC Connection 10-Q Details Record Q3: $874.3M Sales, $1.24 EPS, Margin Slips to 18.5%
CNXN sits 62% above its 52-week low of $54.965.
Summary
PC Connection's Q3 10-Q confirms record sales of $874.3 million (+23.3%) and diluted EPS of $1.24, but gross margin fell to 18.5% and nine-month operating cash flow turned negative on a large working-capital build.
Key Events · Earnings and Guidance · CNXN
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Record Q3 Sales of $874.3M
Net sales rose 23.3% from $709.1 million, with Enterprise Solutions up 27.4% to $407.5 million and Business Solutions up 27.8% to $328.2 million.
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EPS $1.24, Margin Down 110 bps
Diluted EPS rose to $1.24 from $0.97 and net income to $31.5 million from $24.7 million, but gross margin fell to 18.5% from 19.6% as Business Solutions margin dropped 270 basis points to 23.8%.
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Operating Cash Flow Turns Negative
Nine-month operating cash flow was -$39.8 million versus +$38.0 million a year ago, driven by a $144.8 million receivables build and an $83.0 million inventory increase to $226.6 million.
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Debt-Free Balance Sheet
Cash of $124.6 million plus short-term investments of $218.7 million, with no borrowings; the prior $50 million credit facility expired March 31, 2025 and was not replaced.
Analysis · CNXN · Trade & Services
The 10-Q puts full financial statements behind the earnings release filed the same day. Sales grew 23.3% to $874.3 million and diluted EPS rose to $1.24 from $0.97, but gross margin fell 110 basis points to 18.5% as lower-margin hardware and Business Solutions mix drove the growth — profit dollars rose while profit rate compressed. The balance sheet remains debt-free with $124.6 million of cash plus $218.7 million of short-term investments, yet nine-month operating cash flow swung to negative $39.8 million from positive $38.0 million a year ago as receivables rose $144.8 million and inventories $83.0 million to support large customer deployments. Public Sector remains the weak spot, with nine-month sales down 9.3% on a 46.7% drop in federal revenue.
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At the time of this filing, CNXN was trading at $89.09 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $2.2B. The 52-week trading range was $54.97 to $96.91. This filing was assessed with positive market sentiment and an importance score of 7 out of 10.