Connection (cnxn) reports fourth quarter and full year 2021 results
Merrimack, n.h.--(business wire)--connection (pc connection, inc.; nasdaq: cnxn), a leading information technology solutions provider to business, government, healthcare and education markets, today announced results for the fourth quarter and year ended december 31, 2021. “we are pleased to report record fourth quarter consolidated revenue and gross profit. our enterprise and business solutions segments achieved record revenues on a quarterly basis. these results demonstrate the continued execution of our business strategy to connect our customers with technology that enhances growth, elevates productivity, and empowers innovation. this strong financial performance was significantly impacted by the ongoing needs of our customers to work-from-anywhere,” said tim mcgrath, president and ceo of connection. net sales for the quarter ended december 31, 2021 increased by 18.4% to $800.2 million, compared to $675.7 million for the prior year quarter. net income for the quarter ended december 31, 2021 increased by 37.4% to $22.4 million, or $0.85 per diluted share, compared to net income of $16.3 million, or $0.62 per diluted share, for the prior year quarter. net sales for the year ended december 31, 2021 increased by 11.7% to $2.9 billion, compared to $2.6 billion for the year ended december 31, 2020. net income for the year ended december 31, 2021 increased by 25.4% to $69.9 million, or $2.65 per diluted share, compared to net income of $55.8 million, or $2.12 per diluted share for the year ended december 31, 2020. earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation expense and restructuring and other charges (“adjusted ebitda”) totaled $113.0 million for the year ended december 31, 2021, compared to $90.6 million for the twelve months ended december 31, 2020. 1 quarterly highlights strong performance across our vertical markets: healthcare saw revenue growth of 29% year-over-year which was largely attributed to organizations striving to improve overall productivity and patient care. in the retail vertical, we grew revenue 31% year-over-year as we saw companies invest to improve the technology experience and employee efficiency. revenue for the manufacturing vertical also increased slightly year-over-year as companies continue to invest in core it technologies including cloud, infrastructure, security, and workplace productivity. healthcare saw revenue growth of 29% year-over-year which was largely attributed to organizations striving to improve overall productivity and patient care. in the retail vertical, we grew revenue 31% year-over-year as we saw companies invest to improve the technology experience and employee efficiency. revenue for the manufacturing vertical also increased slightly year-over-year as companies continue to invest in core it technologies including cloud, infrastructure, security, and workplace productivity. quarterly performance by segment: net sales for the business solutions segment increased by 14.4% to $303.5 million in the fourth quarter of 2021, compared to $265.2 million in the prior year quarter. gross profit increased by 14.4% to $58.0 million in the fourth quarter of 2021, compared to $50.7 million in the prior year quarter. gross margin remained relatively flat at 19.1%. net sales for the public sector solutions segment decreased by 4.1% to $129.4 million in the fourth quarter of 2021, compared to $134.9 million in the prior year quarter. sales to state and local government and educational institutions increased by 9.1%, compared to the prior year quarter, while sales to the federal government decreased by 35.3% primarily due to the timing of customer rollouts. gross profit increased slightly to $18.6 million in the fourth quarter of 2021, compared to $18.5 million in the prior year quarter. gross margin increased by 69 basis points to 14.4% primarily due to a change in product and customer mix. net sales for the enterprise solutions segment increased by 33.3% to $367.3 million in the fourth quarter of 2021, compared to $275.6 million in the prior year quarter. gross profit increased by 27.1% to $50.5 million in the fourth quarter of 2021, compared to $39.7 million in the prior year quarter. gross margin decreased by 67 basis points to 13.7% primarily due to a higher mix of end-point devices. quarterly sales by product mix: notebook/mobility sales, the company’s largest product category, increased 32% year over year and accounted for 38% of net sales in the fourth quarter of 2021, compared to 34% of net sales in the fourth quarter of 2020. the increase in this product category was primarily due to the growing hybrid work environment. accessories sales increased by 5% year over year and accounted for 11% of net sales in the fourth quarter of 2021, compared to 13% of net sales in the fourth quarter of 2020. software sales increased by 14% year over year and accounted for 11% of net sales in the fourth quarter of 2021, compared to 12% in the fourth quarter of 2020. desktop sales increased by 24% year over year and accounted for 10% of net sales in the fourth quarter of 2021, compared to 9% of net sales in the fourth quarter of 2020. selling, general and administrative (“sg&a”) expenses increased in the fourth quarter of 2021 to $95.7 million from $89.1 million in the prior year quarter. sg&a as a percentage of net sales was 12.0%, compared to 13.2% in the prior year quarter. the increase in sg&a was primarily due to an increase in variable compensation due to the higher levels of gross profit and an increase in employee benefit costs. cash and cash equivalents were $108.3 million at december 31, 2021, compared to $95.7 million at december 31, 2020. conference call and webcast connection will host a conference call and live web cast today, february 7, 2022 at 4:30 p.m. et to discuss its fourth quarter financial results. to access the conference call (audio only), please dial 877-776-4016 (us) or 973-638-3231 (international) and enter the confirmation number 9987005. a web-cast of the conference call, which will be broadcast live via the internet, and a copy of this press release, can be accessed on connection’s website at ir.connection.com. for those unable to participate in the live call, a replay of the webcast will be available at ir.connection.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year. non-gaap financial information ebitda, adjusted ebitda, adjusted net income and adjusted diluted earnings per share are non-gaap financial measures. these measures are included to provide additional information with respect to the company’s operating performance and earnings. non-gaap measures are not a substitute for gaap measures and should be considered together with the gaap financial measures. our non-gaap financial measures may not be comparable to other similarly titled measures of other companies. a reconciliation to the most directly comparable gaap measures are available in the tables at the end of this release. about connection pc connection, inc. and its subsidiaries, dba connection, (www.connection.com; nasdaq: cnxn) is a fortune 1000 company headquartered in merrimack, nh. with offices throughout the united states, connection delivers custom-configured computer systems overnight from its iso 9001:2015 certified technical configuration lab at its distribution center in wilmington, oh. in addition, the company has over 2,500 technical certifications to ensure that it can solve the most complex issues of its customers. connection also services international customers through its globalserve subsidiary, a global it procurement and service management company. investors and media can find more information about connection at http://ir.connection.com. connection–business solutions (800.800.5555) is a rapid-response provider of it products and services serving primarily the small-and medium-sized business sector. it offers more than 460,000 brand-name products through its staff of technically trained sales account managers, publications, and its website at www.connection.com. connection–enterprise solutions (561.237.3300), www.connection.com/enterprise, provides corporate technology buyers with best-in-class it solutions, in-depth it supply-chain expertise, and real-time access to over 460,000 products and 2,500 vendors through markitplace®, a proprietary next-generation, cloud-based supply chain solution. the team’s engineers, software licensing specialists, and subject matter experts help reduce the cost and complexity of buying hardware, software, and services throughout the entire it lifecycle. connection–public sector solutions (800.800.0019), is a rapid-response provider of it products and services to federal, state, and local government agencies and educational institutions through specialized account managers, publications, and online at www.connection.com/publicsector. cautionary note regarding forward-looking statements statements in this release, other than statements of historical fact, constitute “forward-looking statements” within the meaning of the private securities litigation reform act of 1995. forward-looking statements inherently involve important risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. you can generally identify forward-looking statements by words such as "believe," "expect," "intend," "plan," "estimate," "anticipate," "may," "should," "will," or similar statements or variations of such terms, although not all forward-looking statements include such terms. such risks and uncertainties include, but are not limited to, the continuation of the covid-19 pandemic, including, without limitation, its impact on global supply chains and responses to it, the impact of changes in market demand and the overall level of economic activity and environment, or in the level of business investment in information technology products, product availability and market acceptance, new products, continuation of key vendor and customer relationships and support programs, the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the company, fluctuations in operating results and the ability of the company to manage personnel levels in response to fluctuations in revenue, the ability of the company to hire and retain qualified sales representatives and other essential personnel, the impact of changes in accounting requirements, and other risks detailed in the company's filings with the securities and exchange commission, including under the caption "risk factors" in the company's annual report on form 10-k filed with the securities and exchange commission for the year ended december 31, 2020. the company assumes no obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise, except as required by law. 1 adjusted ebitda is a non-gaap measure. see page 10 for the definition and reconciliation. 2021 2020 % change $ 800,174 $ 675,686 18 % $ 0.85 $ 0.62 37 % 15.9 % 16.1 % 3.9 % 2.9 % 14 18 65 75 38 % 34 % 11 13 11 8 11 12 10 9 6 7 6 9 7 8 100 % 100 % 26,252 26,170 $ 26.00 $ 24.32 $ 22.97 $ 21.23 $ 43.13 $ 47.29 $ 1,132,249 $ 1,237,579 16.3 22.3 $ 112,959 $ 90,566 9.1 12.6 2021 2020 $ 367,291 13.7 % $ 275,625 14.4 % 303,479 19.1 265,173 19.1 129,404 14.4 134,888 13.7 $ 800,174 15.9 % $ 675,686 16.1 % three months ended december 31, years ended december 31, 2021 2020 2021 2020 $ 800,174 $ 675,686 $ 2,892,595 $ 2,590,290 673,139 566,827 2,428,016 2,171,483 127,035 108,859 464,579 418,807 95,731 89,101 368,062 345,741 - - - 992 31,304 19,758 96,517 72,074 (1 ) (18 ) 5 61 - 1,061 - 1,061 (8,918 ) (4,505 ) (26,616 ) (17,431 ) $ 22,385 $ 16,296 $ 69,906 $ 55,765 $ 0.85 $ 0.62 $ 2.67 $ 2.13 $ 0.85 $ 0.62 $ 2.65 $ 2.12 26,229 26,156 26,196 26,157 26,372 26,328 26,364 26,336 december 31, december 31, 2021 2020 $ 108,310 $ 95,655 608,307 611,021 206,555 140,867 10,016 11,437 933,188 858,980 61,011 61,537 9,579 12,821 73,602 73,602 5,868 7,088 910 1,345 $ 1,084,158 $ 1,015,373 $ 281,836 $ 266,846 31,741 17,828 61,830 57,586 375,407 342,260 19,278 18,525 6,789 9,631 211 8,630 401,685 379,046 290 289 122,354 119,891 605,766 562,084 (45,937 ) (45,937 ) 682,473 636,327 $ 1,084,158 $ 1,015,373 three months ended december 31, years ended december 31, 2021 2020 2021 2020 $ 22,385 $ 16,296 $ 69,906 $ 55,765 3,037 3,268 12,202 13,603 1,603 40 3,307 3,316 1,113 802 4,231 2,668 753 (1,645 ) 753 (1,645 ) - (1,061 ) - (1,061 ) (38 ) 15 (36 ) 28 (24,530 ) (20,115 ) (2,093 ) (63,650 ) (31,181 ) (6,178 ) (65,688 ) (16,201 ) 1,781 (346 ) 1,421 622 121 321 435 (398 ) 64,811 (16,221 ) 14,814 32,515 9,065 14,523 18,502 10,536 48,920 (10,301 ) 57,754 36,098 (3,210 ) (1,422 ) (10,302 ) (11,033 ) 69 69 - - 1,500 - (3,141 ) (1,422 ) (8,733 ) (11,033 ) - - - (10,222 ) (26,224 ) - (34,599 ) (8,427 ) - - - 536 (973 ) (673 ) (1,767 ) (1,357 ) (27,197 ) (673 ) (36,366 ) (19,470 ) 18,582 (12,396 ) 12,655 5,595 89,728 108,051 95,655 90,060 $ 108,310 $ 95,655 $ 108,310 $ 95,655 $ - $ 8,375 $ - $ 8,375 $ - $ 1,500 $ - $ 1,500 $ 334 $ 442 334 442 $ 865 $ 5,643 $ 21,465 $ 19,441 three months ended december 31, years ended december 31, (1) 2021 2020 % change 2021 2020 % change $ 22,385 $ 16,296 37 % $ 69,906 $ 55,765 25 % 3,037 3,269 (7 %) 12,202 13,603 (10 %) 8,918 4,505 98 % 26,616 17,431 53 % 4 29 (86 %) 4 107 (96 %) 34,344 24,099 43 % 108,728 86,906 25 % - - 0 % - 992 (100 %) 1,113 801 39 % 4,231 2,668 59 % $ 35,457 $ 24,900 42 % $ 112,959 $ 90,566 25 % three months ended december 31, years ended december 31, 2021 2020 % change 2021 2020 % change $ 22,385 $ 16,296 37 % $ 69,906 $ 55,765 25 % - - 0 % - 755 -100 % $ 22,385 $ 16,296 37 % $ 69,906 $ 56,520 24 % 26,372 26,328 26,364 26,336 $ 0.85 $ 0.62 37 % $ 2.65 $ 2.12 25 % $ 0.85 $ 0.62 37 % $ 2.65 $ 2.15 24 %
