Q1 2022 PC Connection Inc Earnings Call

May 5, 2022

[music].

Ladies and gentlemen, this is the operator todays conference is scheduled to begin shortly please continue to standby. Thank you for your patients again that today's conference is scheduled to begin shortly please continue to standby. Thank you for patients.

[music].

Good afternoon, and welcome to the first quarter 2022 connection earnings Conference call. My name is Rachel and I'll 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 appropriate of connect.

<unk> and may not be recorded or rebroadcast without specific permission from the company.

On the call today are D 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.

May begin the conference.

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 provisions under the private Securities Litigation Reform Act of 1095.

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, 2021, which is on file with the Securities and Exchange Commission as well.

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 view as of any date subsequent to today.

During this call GAAP and non-GAAP financial measures will be discussed a reconciliation between the two is available in today's earnings release and on the company's website at Www Dot connection Dot com.

Please note that unless otherwise stated all references to first quarter 2022 comparisons are being made against the first quarter of 2021.

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 Dot FCC Dot Gov, and the Investor Relations section of our website at Www Dot connection Dot 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 Connection's Q1, 2022 conference call.

I will begin this afternoon with an overview of our first quarter results highlights of our performance and then share our updated thoughts on 2022.

Tom will walk us through a more detailed look at our financials.

We are pleased to announce a record first quarter for revenue gross profit and net income these.

These results demonstrate the continued execution of our business strategy to connect our customers with technology that enhances growth elevate productivity and empowers innovation.

A number of factors contributed to our record performance, including our focus on helping our customers navigate and optimize their supply chain needs.

Our commitment to helping our customers transition back to office in a hybrid capacity and our continued focus on cloud and data center transformation helped to drive this record Q1 performance.

On a consolidated basis Q1 revenue grew by 23, 8% compared to last year's first quarter. The business solutions segment grew 31%.

The enterprise segment grew 26, 4% and the public sector grew five 8%.

We also delivered strong double digit growth across all of our vertical markets.

Our healthcare vertical which is our largest vertical grew 25% year over year, while our manufacturing retail and finance verticals grew 20%, 26% and 48% respectively.

The supply chain issues that we referenced in the past quarters have persisted throughout Q1. Consequently, our backlog has increased for the fifth consecutive quarter.

Our team has continued to leverage our capabilities to navigate the ongoing supply constraints on behalf of our customers.

Our long standing loyal customers know that we have the expertise scale and capacity to secure and store product and build out customized solutions on their behalf.

Apply chain issues combined with some large project Rollouts currently in progress have resulted in increased inventory level in the first quarter compared to the fourth quarter of 2021.

We expect these supply chain issues to persist for at least the remainder of the year.

Now, let's discuss our Q1 performance in a little greater detail.

As I stated earlier first quarter revenue was up 23, 8% to $788 3 million from 2021, while gross profit was up 27, 6% to $128 3 million.

Gross margins were 16, 3% up 49 basis points from Q1 2021 as margins increased in all three segments. Despite a stronger mix of endpoint devices.

Operating income in Q1 was $30 1 million, an increase of 113, 4% or three 8% of net sales compared to $14 1 million or two 2% of net sales in the prior year quarter.

In Q1 2022, our diluted earnings per share was <unk> 83, and.

An increase of 113, 6% from 39 in Q1 2021.

We ended Q1 with $67 4 million of cash and cash equivalents, we will now take a little deeper look into segment performance.

And our business solutions segment, our Q1 net sales hit an all time record of $320 4 million, an increase of 31% compared to $246 3 million a year ago.

Gross profit in the business solutions segment was $62 1 million, an increase of 31, 2% from a year ago.

Margin increased 16 basis points to 19, 4% in the quarter compared to the prior year, primarily due to changes in product mix. We saw continued demand from work from anywhere solutions driving endpoint growth along with strong performance in servers cloud solutions networking.

And services.

And our public sector solutions business Q1, net sales were $132 5 million, an increase of five 8% compared to $125 3 million a year ago sales to state and local government and educational institutions were $101 8 million an increase of.

<unk> thousand 14, 4% compared to the prior year.

Sales to the federal government decreased $5 6 million year over year to $30 7 million.

Gross profit for the public sector segment was $17 3 million an increase of 10, 5% compared to Q1 'twenty. One gross margin increased by 56 basis points to 13, 1%, primarily due to changes in both product and customer mix.

In our enterprise solutions segment Q1, net sales were $335 4 million, an increase of 26, 4% compared to $265 3 million a year ago.

Profit for the Enterprise segment was $48 9 million, an increase of 33% in the quarter.

Gross margin for the quarter increased by 44 basis points to 14, 6%. The increase in gross margin percentage was primarily due to changes in product mix as customers transitioned back into the office. In addition, we also had good growth in storage networking.

And security.

I will 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.

SG&A decreased 111 basis points to 12, 5% of net sales in this quarter due to improved efficiencies on higher revenue.

On a dollar basis, SG&A increased $11 8 million compared to the prior year quarter.

This increase was primarily due to an increase in variable compensation due to higher levels of gross profit and an increase in marketing costs Q.

Q1, operating income was $30 1 million up 113, 4% this quarter from $14 1 million a year ago.

Our effective tax rate was 27, 7% down from 27, 8% in the same period a year ago.

Net income for the quarter was $21 8 million, an increase of 114% from $10 2 million a year ago.

Diluted earnings per share was <unk> 83, an increase of 113, 6% from the prior year period.

Our trailing 12 month adjusted earnings before income taxes, depreciation and amortization or adjusted EBITDA was $129 1 million compared to $84 4 million a year ago, an increase of 53%.

Cash flow used in operations for the first quarter was $38 3 million versus cash flow from operations of $6 million for the same period last year.

The decrease in cash flow from operations reflects higher levels of business activity and consequently, both accounts receivable and inventory increased in the quarter.

Our DSO improved by five days in the quarter, while inventory turns declined as a result of the supply chain issues and large project Rollouts <unk> mentioned earlier.

Our net cash used in investing activities of $2 5 million in the first quarter was primarily the result of equipment purchases and it initiatives.

In addition, we also have $12 7 million for stock repurchases under our existing stock repurchase program I will now turn the call back over to Tim to discuss current market trends.

Thanks, Tom I.

I wanted to take a few minutes to review some of the highlights in our business.

Our customers look to connection to deliver innovative solutions and with the changing landscape hybrid returned to office continues to be of high importance and a significant driver of our growth in Q1.

Our growth in market share in Q1 is largely attributable to the customized solutions that we deliver on behalf of our customers as they continue to work through their digital transformation efforts to gain competitive advantage with technology in this rapidly evolving market.

We expect this trend will continue at least into the third quarter.

Our years of experience with supply chain optimization, and our ability to deliver custom solutions continue to be important components of our growth and a competitive differentiator for us.

Our growth was also attributed to our expertise in delivering customized solutions to our vertical markets. For example in the retail vertical we grew 26% year over year as a result of retailers new customer acquisition strategies, which include upgrading in store infrastructure.

And improving the overall customer experience.

The healthcare vertical saw revenue growth of 25% year over year as healthcare. It decision makers have re engaged in major it investments, including employee health record migrations to the cloud.

And the revitalization of on premise investments as the balance of activity shifts more towards infrastructure and data center solutions in the workplace.

Revenue for the manufacturing vertical grew 20% year over year as manufacturers are revisiting accelerating or investing for the first time and smart manufacturing solutions and technology modernization.

Looking forward to the remainder of 2022, we expect our customers to continue to focus on data center and cloud transformation.

As well as other infrastructure projects that have been put off due to the pandemic.

More than ever before customers are asking us to help them manage their it solutions. We're pleased to say we are delivering a record number of configurations and it services through our technology integration and distribution center.

We believe that we can continue to deliver growth rates that are two to 300 basis points above the industry and take market share.

Naturally we are monitoring the recent developments in the supply chain that impact both production and delivery and we expect the supply chain constraints will continue for the remainder of the year.

We remain focused on helping our customers with their supply chain optimization cloud and data center transformation.

As well as hybrid returned to work.

I'd like to take a moment to thank our valued employees for their continued effort and extraordinary dedication in this rapidly changing environment, we will now entertain your questions operator.

Yes.

Thank you and as a reminder to ask a question you will need to press Star and then the number one on your telephone keypad and do we draw your question press the pound key.

Pause for a moment to compile the Q&A roster.

Our first question comes from the line of Anthony lipid since Keith with Sidoti Your line is open.

Good afternoon, and thank you for taking the questions Hope you guys are doing well.

Thank you.

So.

First as far as the backlog. So you mentioned that it's up for the fifth consecutive quarter could you give us a sense as to what are the main components of that backlog.

How should we think about that.

Yes, so thanks Anthony.

Yes. It is.

Pretty widespread and it does vary based on supplier some of the data center networking and security.

Hardware products have a fairly significant backlog in those states continue to be problematic. Some of the more endpoint device laptop products have done a little better recently, but our backlog is still comprise a lot of endpoint devices.

Got you Okay alright.

Alright, and then.

In terms of just the quarters you just reported obviously, a very solid start to the year, but just wanted to get a better sense as to as far as the revenue overall.

<unk> versus volumes.

Wanted to get a better sense of that.

Weather.

Or are they just kind of.

Overall components of that increase.

Yes.

Thank you Anthony.

It was largely volume driven and.

And the hardware part of our business are all in margins did improve year over year, a little bit but.

It was.

There is a lot of volume going through the system right now so.

And I think.

In terms of the margin rate, we also give a little bit of tailwind from the software netting but it was not as significant as it is.

Just the sheer amount of product we put through the system.

Okay, Great and then.

So as we look to update our models for the balance of the year, how should we think about your ability to drive continued revenue growth. Obviously, there's a lot of noise in the market and a lot of.

Skittishness.

Fears about maybe a potential recession. It doesn't sound like you guys are seeing any of that but.

How should we think about kind of the balance of the year.

Well, that's a great question, obviously, we've been watching the competitive landscape closely working closely with our suppliers and.

We saw that IDC and others have talked about.

The potential decline in endpoint or in the device market. So we're watching that closely but if you look at the composition of our customers and overall composition of our gross profit models.

So much of it is depend on customized solutions for independent on excuse me customized solutions and.

So many of those customized solutions do have an endpoint component and we.

We do share the view like many of our suppliers that.

Pcs are still essential we think the demand will continue and certainly everyone's forecasting that demand will pull back in the second half of the year, but we're pretty optimistic because of the level of customization, we do it.

As we build those devices into an overall solution.

We're still really confident certainly through Q2 and beyond that we're going to have good demand Tom.

Yes.

And frankly, when we talk to our <unk>.

Partners I think most of them.

Pretty bullish as well I think generally people think.

That.

Data center will pick up a little bit more in the second half.

Sitting here today.

Things seem to be plugged.

Plugging along and it looks like there is going to continue.

Okay.

Good to hear alright, well, thank you and best of luck.

Yeah. Thanks, Thanks, Dave.

Our next question comes from the line of gasoline Huntley with Raymond James Your line is open.

Hey, this is Katherine on for Adam. Thank you so much for taking our questions and congratulations on the result.

Hey, good afternoon.

So just looking at the market versus you guys. This year, how are you thinking about your growth.

You versus the market in the past you've shared with us that it could be on a blended basis, 6% to 7% is this the framework, we should stick to the things forward into this year.

Actually.

Again, a great question when we look at the balance of the year.

We believe in many.

As we are taking market share and we believe that we can grow 2% to 300 basis points above that overall market rate of growth and certainly for Q2 that number is elevated above the 6% to 7% Mark I think we're closer to.

Im going to be north of that yes, we.

We'll be well north of that in Q2, and again, we're fairly optimistic about the balance of the year and as Tom mentioned, we do know that mix will change more data center more cloud more infrastructure in the back half of the year.

Perfect. That's great color and can you give us a sense for how far our customers are booking orders ahead, specifically in data centers since that's still constrained I can imagine for endpoint devices, it's probably alleviated, but are customers still booking orders out really far ahead in data center and networking.

Yes, they are so.

The infrastructure data center networking projects are often planned well in advance and we recently in fact this week.

Placed some orders for data center equipment and the lead time was in months so it really.

Many of those suppliers still are struggling getting us product and we've encouraged our customers and our sales force to make sure they're as proactive as possible to be in front of that.

But no doubt about it many of those lead times are still extended.

Awesome. Thank you so much and keep up the great work.

Thank you.

Thank you and this concludes our question and answer session I would now like to turn the conference back to Tim.

Well, thanks, Rachel I'd like to thank all of our customers vendor partners and shareholders for their continued support and once again, our dedicated coworkers for their efforts and extraordinary dedication through this time I'd also like to thank all of you for listening to the call. This afternoon, your time and interest in <unk>.

Connection are appreciated have a great evening.

This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

[music].

Okay.

[music].

Okay.

[music].

Yes.

[music].

Okay.

[music].

Okay.

[music].

Okay.

[music].

Okay.

[music].

Okay.

[music].

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

[music].

Sure.

[music].

Yes.

Okay.

[music].

Okay.

[music].

Yes.

[music].

Yes.

Okay.

Yes.

Okay.

[music].

Yes.

Okay.

Yes.

Okay.

Yes.

Great.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

[music].

Yes.

[music].

Yes.

Okay.

Yes.

Thanks.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

This conference call is the property of connection and May not be recorded or rebroadcast without specific permission from the company.

The call today are D 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 you may begin the conference.

Okay.

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 facts may be deemed to be forward looking statements.

<unk> 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, 2021, which is on file with the Securities and Exchange Commission as well as <unk>.

Other documents that the company files with the commission from time to time.

One 2022 conference call.

I will begin this afternoon with an overview of our first quarter results highlights of our performance and then share are updated thoughts on 2022.

Tom will walk us through a more detailed look at our financials.

We are pleased to announce our records first quarter for revenue gross profit and net income.

These results demonstrate the continued execution of our business strategy to connect our customers with technology that enhances growth elevates productivity and empowers innovation.

A number of factors contributed to a record performance, including our focus on helping our customers navigate and optimize their supply chain needs.

Our commitment to helping our customers transitioned back to office in a hybrid capacity and our continued focus on cloud in data center transformation helped to drive this record Q1 performance.

On a consolidated basis Q1 revenue grew by 23.8% compared to last year's first quarter. The business solutions segment grew 31% Diana.

The enterprise segment grew 26.4% in the public sector grew 5.8%.

We also delivered strong double digit growth across all of our vertical markets.

Our healthcare vertical which is our largest vertical grew twenty-five percent year over year, while our manufacturing retail in finance verticals grew 20%, 26% and 48% respectively.

Supply chain issues that we referenced in the past quarters have persisted throughout Q1. Consequently, our backlog has increased for the fifth consecutive quarter.

Team has continued to leverage our capabilities to navigate the ongoing supply constraints on behalf of our customers.

Our long standing loyal customers know that we have the expertise scale and capacity to secure in store product and build out customized solutions on their behalf.

Fly chain issues combined with some large project Rollouts currently in progress.

Have resulted in an increase inventory level in the first quarter compared to the fourth quarter of 2021.

We expect a supply chain issues to persist for at least the remainder of the year.

Now, let's discuss R Q1 performance at a little greater detail.

As I stated earlier first quarter revenue was up 23.8% to $788.3 million from 2021, while gross profit was up 2007, 6% to $128.3 million.

Gross margins, where 16.3% up 49 basis points from Q1 2021 is margins increased in all three segments. Despite a stronger mix of endpoint devices.

Operating income in Q1 was $31 million, an increase of 113.4% or three 8% of net sales compared to $14 $1 million or $2, 2% of net sales in the prior year quarter.

In Q1 2022 are diluted earnings per share was 83 and.

An increase of 113.6%.

I'm 39, and Q1 2021.

We ended Q1 was $67.4 million of cash and cash equivalents, we will now take a little deeper look into segment performance.

And our business solutions segment R. Q1, net sales hit an all time record of $324 million, an increase of 31% compared to $246.3 million a year ago.

Gross profit in the business solutions segment was $62.1 million, an increase of 31.2% from a year ago.

Margin increased 16 basis points to 19.4% in the quarter compared to the prior year, primarily due to changes in product mix. We saw continued demand from work from anywhere solutions driving endpoint growth along with strong performance and servers cloud solutions networking.

And services.

And our public sector solutions business Q1, net sales were $132.5 million, an increase of five 8% compared to $125.3 million a year ago.

Sales to state and local government and educational institutions, where $101 8 million, an increase of $14, 4% compared to the prior year.

Sales to the federal government decreased 5.6 million year over year to $30.7 million.

Gross profit for the public sector segment was $17.3 million, an increase of 10.5% compared to Q1 21 gross margin increased by 56 basis points to $13, 1%, primarily due to changes in both product and customer mix.

And our enterprise solutions segment Q1, net sales were $335.4 million, an increase of $26, 4% compared to $265.3 million a year ago.

Most profit for the enterprise segment was $48.9 million, an increase of 33% in the quarter.

Gross margin for the quarter increased by 44 basis points to 14.6% <unk>.

The increase in gross margin percentage was primarily due to changes in product mix as customers transitioned back into the office. In addition, we also had good growth in storage networking and security.

I will now turn the call over to Tom to discuss additional financial highlights from our income statement balance sheet and cash flow statements Tom.

Thanks, Tim.

CNA decreased 111 basis points to 12.5% of net sales in this corner due to improved deficiencies on higher revenue.

On one dollar basis, SG&A increased $11.8 million compared to the prior year quarter.

This increase was primarily due to an increase in variable compensation due to higher levels of gross profit and an increase in marketing costs Q.

Q1, operating income was 31 million $113, 4% this quarter from $14 $1 million a year ago.

Our effective tax rate was 27.7% down from 27.8%.

Same period a year ago.

Net income for the quarter was $21.8 million, an increase of 114% from $10.2 million a year ago.

Diluted earnings per share was 83 and.

An increase of 113.6% from the prior year period.

Are trailing 12 month adjusted earnings before income taxes, depreciation and amortization or adjusted EBITDA was $129 $1 million compared to $84 $4 million, a year ago and increased to 53%.

Cash flow used in operations for the first quarter was $38.3 million versus cash flow from operations of $6 million for the same period last year.

The decrease in cash flow from operations reflects higher levels of business activity and consequently, both accounts receivable and inventory increased in the corner.

Our dear so improved by five days in the corner, while inventory turns declined as a result of the supply chain issues and large project rollout mentioned earlier.

Our net cash used in investing activity from $2.5 million in the first quarter was primarily the result of equipment purchases of 19 initiatives.

In addition, we also have $12 7 million for stock repurchases under our existing stock repurchase program I will now turn the call back over to attempt to discuss current market trends.

Thanks, Tom.

I wanted to take a few minutes to review some of the highlights in our business.

Our customers looked a connection to deliver innovative solutions and with the changing landscape hybrid returned to office continues to be of high importance and a significant driver of our growth in Q1.

Our growth in market share in Q1 is largely attributable to the customized solutions that we deliver on behalf of our customers as they continue to work through their digital transformation and efforts to gain competitive advantage with technology and this rapidly evolving market.

We expect this trend will continue at least into the third quarter.

Our years of experience with supply chain optimization, and our ability to deliver custom solutions continues to be important components of our growth and our competitive differentiator for us.

Growth was also attributed to our expertise in delivering customized solutions to our vertical markets. For example in the retail vertical we grew 26% year over year as a result of retailers new customer acquisition strategies, which include upgrading in store infrastructure.

Improving the overall customer experience.

The healthcare vertical saw revenue growth of 25% year over year as healthcare decision makers have re engaged in major investments, including employee health record migrations to the cloud.

And the revitalization of on premise investments as a balance of IP activity shifts more towards infrastructure and data set of solutions in the workplace.

Looking forward to the remainder of 2022, we expect our customers to continue to focus on data center and cloud transformation.

As well as other infrastructure projects that have been put off due to the pandemic.

More than ever before customer who are asking us to help them manage their IP solutions. We're pleased to say we are delivering a record number of configurations and services through our technology integration and distribution center.

We believe that we can continue to deliver growth rates that are two to 300 basis points above the it industry and take market share.

Naturally we are monitoring the recent developments in the supply chain that impact both production and delivery and we expect a supply chain constraints will continue for the remainder of the year.

We remain focused on helping our customers with their supply chain optimization cloud and data center transformation.

As well as hybrid returned to work.

I would like to take a moment to think our valued employees for their continued efforts and extraordinary dedication and this rapidly changing environment.

We will now entertained your questions operator.

Thank you and as a reminder to ask.

Alright, and then the number of lines on your telephone keypad.

Enjoy your question.

Okay.

Alright.

Anthony.

Your line is open.

Good afternoon, and thank you for taking the questions I Hope you guys are doing well.

Thank you.

So.

As far as the backlog. So you mentioned that it's ups for the fifth consecutive quarter could you give us a sense as to what are the main components of that backlog.

How should we think about that.

So thanks Anthony.

It's pretty widespread and it does vary based on supplier some of the data center networking and security.

Hardware products have fairly significant backlog in those states continue to be problematic some of the more endpoint device laptop products.

I have done a little better recently, but our backlog is still comprise a lot of the endpoint devices.

Gotcha Okay.

Right and then.

In terms of just just a quarter to just report it.

Obviously, all very solid start to the year, but I just wanted to get a better sense does too as far as the revenue overall.

Peace versus volumes, just wanted to get a better sense of that.

Whether.

They just kind of.

Overall components of that increase.

Yeah.

Cancer.

Largely volume driven and.

And the hardware part of our business are all in margins did improve year over year, a little bit but.

It was.

There is a lot of volume going through the system right now so.

And I think.

In terms of the margin right. We also give a little bit of tailwind from the software netting but it was not as significant as is just the sheer amount of product we put through the system.

Mhm, Okay, great and then.

So as we look to update our models for the balance of the year, how should we think about your ability to drive continued revenue growth. Obviously, there's a lot of noise in the market and a lot of.

Skittishness.

Fears about maybe a potential recession. It doesn't sound like you guys are seeing any of that but.

How should we think about the <unk>.

Balance of the year.

That's a great question, obviously, we've been watching the competitive landscape closely working closely with our suppliers and.

We saw that I'd see in others I've talked about.

Potential decline, an endpoint or in the device market. So we were watching that closely but if you look at the composition of our customers and overall composition of our gross profit models.

So much of it is depend on customized solutions are dependent on excuse me customized solutions and.

So many of those customized solutions do have an endpoint component.

And.

We do share the view like many of our suppliers that.

P C R.

So essential.

We think the demand will continue.

Certainly everyone's forecasting that demand will pull back in the second half of the year, but we're pretty optimistic because of the level of customization, we do because we build those devices into an overall solution.

We're still really confident.

Three Q2 and beyond that we're going to have good demand Tom.

Yeah Man.

And when we talk to our partners I think most of them are pretty bullish as well I think generally people think.

That.

And data center will pick up a little bit more on the second half but.

Sitting here today.

Things seemed to be plug.

Plugging along and it looks like it's going to continue.

Okay, that's great to hear alright, well, thank you and best of luck.

Thanks Asap.

Our next question comes from the line.

James.

Hey, this is Catherine down for Adam. Thank you so much for taking our questions and congratulations on the result.

And you'd afternoon.

So just looking at the I T market versus you guys. This year. How are you thinking about your growth of you versus the market in the past you shared with us that it could be on a blended basis, 6% to 7% is this the framework, we should stick to moving forward into this year.

Actually.

Again, a great question when we look at the balance of the year.

We believe in many.

As we are taking market share and we believe that we can grow two to 300 basis points above that overall it market rate of growth and certainly for Q2 that number is elevated above the six or seven.

Per cent market I think we're closer to.

We're going to be more for that will be well north of that and Q2 and again, we're fairly optimistic about the balance of the year. It is Tom mentioned, we do know that mix will change more data center more cloud more infrastructure in the back half of the year.

Perfect. That's great color and can you give us a sense for how far customers are booking orders ahead, specifically in data centers since that's still constrained I can imagine for endpoint devices, it's probably alleviated by our customers still booking orders out really far ahead and data center and networking.

Yes, they are so.

The infrastructure data center networking projects are often planned well in advance and we recently in fact this week place orders for data center equipment in the lead time was.

In months, so it really.

Many of those suppliers still are struggling getting us product and we've encouraged our customers and our sales force to make sure. There is proactive as possible to be in front of that.

No doubt about it many of those lead times are still extended.

Awesome. Thank you so much and keep up the great work.

Well thank you.

Okay.

Question and answer session I would now like to turn.

And the conference.

Well, thanks, Rachel I would like to thank all of our customers vendor partners and shareholders. Further continued support and once again, our dedicated co workers further effort to an extraordinary dedication through this time I would also like to thank all of you for listening to the call. This afternoon your time and.

Interest in connection or appreciate it have a great evening.

Okay Simplicities conference call. Thank you for participating.

Q1 2022 PC Connection Inc Earnings Call

Request a DemoDemo

CNXN

PC Connection

Earnings