PC CONNECTION INC 10-Q

Item 1. Financial Statements ​ ​ PC CONNECTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET S (Unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ASSETS ​ ​ ​ ​ ​ ​ Current Assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 196,259 ​ $ 193,221 Short-term investments ​ ​ 215,189 ​ ​ 213,457 Accounts receivable, net ​ 661,481 ​ 648,020 Inventories, net ​ 194,294 ​ 143,567 Prepaid expenses and other current assets ​ 23,382 ​ 22,607 Total current assets ​ 1,290,605 ​ 1,220,872 Property and equipment, net ​ 46,547 ​ 46,912 Right-of-use assets ​ ​ 7,173 ​ ​ 1,569 Goodwill ​ 73,602 ​ 73,602 Intangibles, net ​ 684 ​ 989 Other assets ​ 6,407 ​ 6,981 Total Assets ​ $ 1,425,018 ​ $ 1,350,925 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ Current Liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 396,481 ​ $ 338,202 Accrued payroll ​ 28,142 ​ 30,939 Accrued expenses and other liabilities ​ 52,582 ​ 51,251 Total current liabilities ​ 477,205 ​ 420,392 Deferred income taxes ​ 19,695 ​ 19,905 Non-current operating lease liabilities ​ ​ 6,426 ​ ​ 498 Total Liabilities ​ 503,326 ​ 440,795 Commitments and Contingencies (Note 8) ​ ​ ​ ​ ​ ​ Stockholders’ Equity: ​ ​ ​ ​ ​ ​ Common stock ​ 296 ​ 295 Additional paid-in capital ​ 146,575 ​ 144,608 Retained earnings ​ 918,073 ​ 905,890 Accumulated other comprehensive (loss) income ​ ​ ( 88 ) ​ ​ 78 Treasury stock, at cost ​ ​ ( 143,164 ) ​ ​ ( 140,741 ) Total Stockholders’ Equity ​ 921,692 ​ 910,130 Total Liabilities and Stockholders’ Equity ​ $ 1,425,018 ​ $ 1,350,925 ​ ​ ​ See notes to unaudited condensed consolidated financial statements. 1 Table of Contents PC CONNECTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOM E (Unaudited) (amounts in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Net sales ​ $ 721,866 ​ $ 701,046 Cost of sales ​ 589,129 ​ 573,735 Gross profit ​ 132,737 ​ 127,311 Selling, general and administrative expenses ​ 109,452 ​ 109,859 Severance expenses ​ ​ 3,060 ​ ​ 2,930 Income from operations ​ 20,225 ​ 14,522 Interest income, net ​ 3,363 ​ 3,900 Other income ​ — ​ 76 Income before taxes ​ 23,588 ​ 18,498 Income tax provision ​ ( 6,365 ) ​ ( 5,017 ) Net income ​ $ 17,223 ​ $ 13,481 ​ ​ ​ ​ ​ ​ ​ Earnings per common share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.68 ​ $ 0.52 Diluted ​ $ 0.68 ​ $ 0.51 ​ ​ ​ ​ ​ ​ ​ Shares used in computation of earnings per common share: ​ ​ ​ ​ ​ ​ Basic ​ 25,201 ​ 26,076 Diluted ​ 25,281 ​ 26,218 ​ ​ ​ See notes to unaudited condensed consolidated financial statements. 2 Table of Contents PC CONNECTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Net income ​ $ 17,223 ​ $ 13,481 Other comprehensive loss: ​ ​ ​ ​ ​ ​ Unrealized losses on available-for-sale investments, net of tax of $ 44 and $ 30 for the three months ended March 31, 2026 and 2025, respectively ​ ( 166 ) ​ ( 113 ) Comprehensive income ​ $ 17,057 ​ $ 13,368 ​ ​ ​ ​ ​ See notes to unaudited condensed consolidated financial statements. 3 Table of Contents ​ ​ PC CONNECTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2026 ​ ​ Common Stock ​ Additional ​ Retained ​ Accumulated Other ​ Treasury Shares ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Paid-In Capital ​ ​ ​ Earnings ​ ​ ​ Comprehensive (Loss) Income ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Total Balance - December 31, 2025 29,525 ​ $ 295 ​ $ 144,608 ​ $ 905,890 $ 78 ( 4,304 ) ​ $ ( 140,741 ) ​ $ 910,130 Stock-based compensation expense — ​ — ​ 2,639 ​ — — — ​ — ​ 2,639 Restricted stock units vested 41 ​ 1 ​ ( 1 ) ​ — — — ​ — ​ — Shares withheld for taxes paid on stock awards — ​ — ​ ( 671 ) ​ — — — ​ — ​ ( 671 ) Repurchase of common stock for treasury — ​ — ​ — ​ — — ( 42 ) ​ ( 2,423 ) ​ ( 2,423 ) Dividend declaration ($ 0.20 per share) — ​ — ​ — ​ ( 5,040 ) — — ​ — ​ ( 5,040 ) Net income — ​ — ​ — ​ 17,223 — — ​ — ​ 17,223 Other comprehensive loss, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 166 ) ​ — ​ ​ — ​ ​ ( 166 ) Balance - March 31, 2026 29,566 ​ $ 296 ​ $ 146,575 ​ $ 918,073 $ ( 88 ) ( 4,346 ) ​ $ ( 143,164 ) ​ $ 921,692 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2025 ​ ​ Common Stock ​ Additional ​ Retained ​ Accumulated Other ​ Treasury Shares ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Paid-In Capital ​ ​ ​ Earnings ​ ​ ​ Comprehensive (Loss) Income ​ ​ ​ Shares ​ ​ ​ Amount ​ ​ ​ Total Balance - December 31, 2024 29,390 ​ $ 294 ​ $ 137,036 ​ $ 837,466 ​ $ 174 ​ ( 3,090 ) ​ $ ( 63,980 ) ​ $ 910,990 Stock-based compensation expense ​ — ​ ​ — ​ ​ 2,208 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,208 Restricted stock units vested 25 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ — Shares withheld for taxes paid on stock awards — ​ ​ — ​ ​ ( 519 ) ​ ​ — ​ ​ — ​ — ​ ​ — ​ ( 519 ) Repurchase of common stock for treasury — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ( 697 ) ​ ​ ( 45,162 ) ​ ( 45,162 ) Dividend declaration ($ 0.15 per share) — ​ — ​ — ​ ( 3,910 ) — — ​ — ​ ( 3,910 ) Net income — ​ — ​ — ​ 13,481 — — ​ — ​ 13,481 Other comprehensive loss, net of tax — ​ — ​ — ​ — ( 113 ) — ​ — ​ ( 113 ) Balance - March 31, 2025 29,415 ​ $ 294 ​ $ 138,725 ​ $ 847,037 $ 61 ( 3,787 ) ​ $ ( 109,142 ) ​ $ 876,975 ​ ​ See notes to unaudited condensed consolidated financial statements. 4 Table of Contents PC CONNECTION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW S (Unaudited) (amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2026 ​ ​ ​ 2025 Cash Flows provided by (used in) Operating Activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 17,223 ​ $ 13,481 Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 2,797 ​ 3,099 Adjustments to credit losses reserve ​ 239 ​ 395 Stock-based compensation expense ​ 2,639 ​ 2,208 Deferred income taxes ​ ( 166 ) ​ — Amortization of discount on short-term investments, net ​ ( 889 ) ​ ( 45 ) Gain on sale of short-term investments ​ — ​ ( 76 ) Loss on disposal of fixed assets ​ 50 ​ 16 Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 13,700 ) ​ 7,054 Inventories ​ ( 50,727 ) ​ ( 56,738 ) Prepaid expenses and other current assets ​ ( 775 ) ​ ( 2,668 ) Other non-current assets ​ 574 ​ 84 Accounts payable ​ 58,086 ​ ( 26,958 ) Accrued expenses and other liabilities ​ ( 1,084 ) ​ 7,761 Net cash provided by (used in) operating activities ​ 14,267 ​ ( 52,387 ) Cash Flows (used in) provided by Investing Activities: ​ ​ ​ ​ ​ ​ Purchases of short-term investments ​ ​ ( 54,270 ) ​ ​ ( 52,358 ) Proceeds from sale of short-term investments ​ ​ — ​ ​ 108,763 Maturities of short-term investments ​ ​ 53,217 ​ ​ 50,000 Purchases of property and equipment ​ ​ ( 1,984 ) ​ ​ ( 1,711 ) Net cash (used in) provided by investing activities ​ ( 3,037 ) ​ 104,694 Cash Flows used in Financing Activities: ​ ​ ​ ​ ​ ​ Proceeds from short-term borrowings ​ — ​ 732 Repayment of short-term borrowings ​ ​ — ​ ​ ( 732 ) Purchase of common stock for treasury shares ​ ( 2,481 ) ​ ( 43,739 ) Dividend payments ​ ( 5,040 ) ​ ( 3,910 ) Payment of payroll taxes on stock-based compensation through shares withheld ​ ( 671 ) ​ ( 519 ) Net cash used in financing activities ​ ( 8,192 ) ​ ( 48,168 ) Increase in cash and cash equivalents ​ 3,038 ​ 4,139 Cash and cash equivalents, beginning of period ​ 193,221 ​ 178,318 Cash and cash equivalents, end of period ​ $ 196,259 ​ $ 182,457 ​ ​ ​ ​ ​ ​ ​ Non-cash Investing and Financing Activities: ​ ​ ​ ​ ​ ​ Accrued purchases of property and equipment ​ $ 278 ​ $ 437 Accrued purchase of treasury shares ​ $ — ​ $ 1,027 Accrued excise tax on treasury purchases ​ $ 678 ​ $ 432 ​ ​ ​ ​ ​ See notes to unaudited condensed consolidated financial statements. 5 Table of Contents PC CONNECTION, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENT S (Unaudited) (amounts in thousands, except per share data) Note 1– Basis of Presentation ​ The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries, or the Company, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting and in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. Such principles were applied on a basis consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. ​ In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three months ended March 31, 2026 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2026. ​ Use of Estimates in the Preparation of Financial Statements ​ The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions. ​ Cash and Cash Equivalents and Investments ​ The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ​ At the time of purchase, the Company determines the appropriate classification of investments based upon its intent with regard to such investments. All of the Company’s investments are classified as available-for-sale. The Company classifies investments as short-term when their remaining contractual maturities are one year or less from the balance sheet date, and as long-term when the investment has a remaining contractual maturity of more than one year from the balance sheet date. The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive (loss) income on the condensed consolidated balance sheets. ​ Included in interest income, net on the condensed consolidated statements of income is interest income on cash equivalents and short-term investments of $ 3,177 and $ 3,801 for the three months ended March 31, 2026 and 2025, respectively. ​ Treasury Stock, at Cost ​ The total repurchases for the three months ended March 31, 2026 and 2025 were recorded as treasury stock of $ 2,423 and $ 45,162 , respectively. Such costs reflect the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022. 6 Table of Contents Severance Expenses ​ The severance expenses recorded for the three months ended March 31, 2026 and 2025 were related to voluntary and involuntary reductions in the Company’s workforce to lower the Company’s cost structure. Both the voluntary and involuntary reductions included cash severance and other related termination benefits. The majority of each of these costs are expected to be paid within a year of the applicable termination. Included in accrued payroll on the condensed consolidated balance sheets as of March 31, 2026 was $ 1,800 related to unpaid severance expenses. ​ Recently Issued Financial Accounting Standards ​ In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . This guidance is intended to provide more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses, and depreciation expense. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2027, and for interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. ​ In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . This guidance provides a practical expedient related to estimating expected credit losses for accounts receivable and contract assets by assuming that current conditions remain unchanged over the life of the asset. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2026, and for interim reporting periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. ​ In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This guidance was issued to establish new criteria to be considered for capitalization of software costs under Subtopic 350-40, as well as link the disclosure requirements of Subtopic 360-10 to capitalized costs accounted for under Subtopic 350-40. This ASU is effective for the Company’s annual reporting periods beginning January 1, 2028, and for interim reporting periods beginning January 1, 2029, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements. ​ In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements . This guidance is intended to improve the navigability of required interim disclosures and clarify when the guidance is applicable, as well as provide additional guidance on what disclosures should be provided in interim reporting periods. This ASU is effective for the Company’s interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statement disclosures. ​ Note 2–Revenue ​ The Company disaggregates revenue from its arrangements with customers by type of products and services, as it believes this method best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. ​ 7 Table of Contents The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended March 31, 2026 and 2025, along with the segment for each category (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2026 ​ ​ ​ ​ Enterprise Solutions ​ ​ ​ Business Solutions ​ Public Sector Solutions ​ ​ ​ Total Notebooks/Mobility ​ $ 124,643 ​ $ 104,579 ​ $ 35,728 ​ $ 264,950 Desktops ​ ​ 51,689 ​ ​ 25,255 ​ ​ 10,169 ​ ​ 87,113 Software ​ ​ 28,785 ​ ​ 39,704 ​ ​ 9,972 ​ ​ 78,461 Servers/Storage ​ ​ 17,810 ​ ​ 20,413 ​ ​ 6,850 ​ ​ 45,073 Net/Com Products ​ ​ 21,763 ​ 20,662 ​ ​ 7,563 ​ 49,988 Displays and Sound ​ 26,967 ​ ​ 19,798 ​ 10,698 ​ ​ 57,463 Accessories ​ 46,589 ​ 23,901 ​ 9,586 ​ 80,076 Other Hardware/Services ​ 28,225 ​ 21,250 ​ 9,267 ​ 58,742 Total net sales ​ $ 346,471 ​ $ 275,562 ​ $ 99,833 ​ $ 721,866 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2025 ​ ​ ​ ​ Enterprise Solutions ​ ​ ​ Business Solutions ​ Public Sector Solutions ​ ​ ​ Total Notebooks/Mobility ​ $ 87,542 ​ $ 102,346 ​ $ 67,578 ​ $ 257,466 Desktops ​ ​ 53,472 ​ ​ 23,793 ​ ​ 12,859 ​ ​ 90,124 Software ​ ​ 33,445 ​ ​ 32,186 ​ ​ 8,732 ​ ​ 74,363 Servers/Storage ​ ​ 17,902 ​ ​ 20,290 ​ ​ 11,935 ​ 50,127 Net/Com Products ​ ​ 18,255 ​ ​ 18,015 ​ ​ 9,852 ​ 46,122 Displays and Sound ​ 23,012 ​ 19,308 ​ 10,542 ​ ​ 52,862 Accessories ​ 39,807 ​ 23,660 ​ 15,729 ​ ​ 79,196 Other Hardware/Services ​ 24,568 ​ 18,787 ​ 7,431 ​ 50,786 Total net sales ​ $ 298,003 ​ $ 258,385 ​ $ 144,658 ​ $ 701,046 ​ Contract Balances ​ The following table provides information about contract liabilities from arrangements with customers as of March 31, 2026 and December 31, 2025 (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2026 ​ ​ ​ December 31, 2025 Contract liabilities, which are included in "Accrued expenses and other liabilities" ​ $ 11,235 ​ $ 8,801 ​ Changes in the contract liability balances during the three months ended March 31, 2026 and 2025 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ 2026 Balance at December 31, 2025 ​ $ 8,801 Cash received in advance and not recognized as revenue ​ 8,359 Amounts recognized as revenue as performance obligations satisfied ​ ( 5,925 ) Balance at March 31, 2026 ​ $ 11,235 ​ ​ ​ ​ ​ ​ 2025 Balance at December 31, 2024 ​ $ 10,290 Cash received in advance and not recognized as revenue ​ 16,201 Amounts recognized as revenue as performance obligations satisfied ​ ( 10,391 ) Balance at March 31, 2025 ​ $ 16,100 ​ ​ 8 Table of Contents Note 3–Fair Value Measurements ​ Cash equivalents and short-term investments as of March 31, 2026 and December 31, 2025 consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2026 ​ ​ ​ ​ Amortized Cost ​ ​ ​ Unrealized Gains ​ ​ ​ Unrealized Losses ​ ​ ​ Fair Value Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 179,195 ​ $ — ​ $ — ​ $ 179,195 Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Government treasury securities ​ ​ 215,299 ​ ​ 6 ​ ​ ( 116 ) ​ ​ 215,189 Total ​ $ 394,494 ​ $ 6 ​ $ ( 116 ) ​ $ 394,384 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ ​ Amortized Cost ​ ​ ​ Unrealized Gains ​ ​ ​ Unrealized Losses ​ ​ ​ Fair Value Cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 170,826 ​ $ — ​ $ — ​ $ 170,826 Short-term investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Government treasury securities ​ ​ 213,358 ​ ​ 99 ​ ​ — ​ ​ 213,457 Total ​ $ 384,184 ​ $ 99 ​ $ — ​ $ 384,283 ​ Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with maturities of one year or greater from the date of purchase are generally classified as long-term investments. All short-term investments had stated maturity dates of less than one year. The Company has recorded the securities at fair value on its condensed consolidated balance sheets and unrealized gains and losses are reported as a component of accumulated other comprehensive (loss) income. The amount of realized gains and losses reclassified into earnings and the related adjustments to deferred taxes are based on the specific identification of the securities sold or securities that reached maturity date. ​ Fair Value ​ The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows: ​ ● Level 1 inputs: Quoted prices for identical assets or liabilities in active markets; ​ ● Level 2 inputs: Observable inputs other than those described as Level 1; and ​ ● Level 3 inputs: Unobservable inputs that are supported by little or no market activities and are based on significant assumptions and estimates. ​ As of March 31, 2026 and December 31, 2025, the fair values of the Company’s investments were all measured using level 1 inputs. ​ ​ Note 4–Earnings Per Share ​ Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributable to non-vested stock units and stock options outstanding, if dilutive. ​ 9 Table of Contents The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2026 and 2025 (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 17,223 ​ $ 13,481 Denominator: ​ ​ ​ ​ ​ ​ Denominator for basic earnings per share ​ 25,201 ​ 26,076 Dilutive effect of employee stock awards ​ 80 ​ 142 Denominator for diluted earnings per share ​ 25,281 ​ 26,218 Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.68 ​ $ 0.52 Diluted ​ $ 0.68 ​ $ 0.51 ​ For the three months ended March 31, 2026 and 2025, the Company had no outstanding non-vested stock units that were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. ​ Note 5 – Leases ​ The Company leases certain facilities from a related party, which is a company affiliated with it through common ownership. The costs for these leases are presented within short-term lease cost in the below table. ​ During the three months ended March 31, 2026, the Company entered into a lease amendment extending the term of a lease, which increased the right-of-use, or ROU, asset by $ 6,056 . ​ As of March 31, 2026, there were no additional significant operating leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the three months ended March 31, 2026 and 2025 (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 ​ Related Parties ​ Others ​ Total Related Parties ​ Others ​ Total Lease Cost ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized operating lease cost ​ $ — ​ $ 521 ​ $ 521 ​ $ — ​ $ 461 ​ $ 461 Short-term lease cost ​ 418 ​ 141 ​ 559 ​ 420 ​ 148 ​ 568 Total lease cost ​ $ 418 ​ $ 662 ​ $ 1,080 ​ $ 420 ​ $ 609 ​ $ 1,029 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Information ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating cash flows ​ $ — ​ $ 463 ​ $ 463 ​ $ — ​ $ 513 ​ $ 513 Right-of-use assets obtained in exchange for lease obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ $ — ​ $ 6,056 ​ $ 6,056 ​ $ — ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (in years): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized operating leases ​ ​ — ​ ​ 6.74 ​ ​ 6.74 ​ ​ — ​ ​ 1.81 ​ ​ 1.81 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average discount rate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized operating leases ​ ​ 0.00 % ​ ​ 4.64 % ​ ​ 4.64 % ​ ​ 0.00 % ​ ​ 4.31 % ​ ​ 4.31 % ​ 10 Table of Contents As of March 31, 2026, future lease payments over the remaining term of capitalized operating leases were as follows (in thousands): ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ ​ 2026, excluding the three months ended March 31, 2026 ​ $ 637 2027 ​ 1,383 2028 ​ 1,227 2029 ​ 1,103 2030 ​ ​ 1,142 Thereafter ​ ​ 3,240 ​ ​ $ 8,732 ​ ​ ​ ​ Imputed interest ​ $ ( 1,352 ) Lease liability balance at March 31, 2026 ​ $ 7,380 ​ As of March 31, 2026, the ROU asset had a balance of $ 7,173 . The long-term lease liability was $ 6,426 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $ 954 . As of December 31, 2025, the ROU asset had a balance of $ 1,569 . The long-term lease liability was $ 498 and the short-term lease liability, which is included in accrued expenses and other liabilities on the condensed consolidated balance sheets, was $ 1,290 . ​ Note 6–Accumulated Other Comprehensive (Loss) Income ​ Accumulated other comprehensive (loss) income, which is included as a component of stockholders’ equity, is comprised of unrealized gains and losses on short-term investments, net of tax. The changes in accumulated other comprehensive (loss) income were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2026 Balance - December 31, 2025 ​ $ 78 Other comprehensive loss before reclassifications, net of tax ​ ​ ( 141 ) Less amounts reclassified from accumulated other comprehensive (loss) income, net of tax ​ 25 Net other comprehensive loss ​ ​ ( 166 ) Balance - March 31, 2026 ​ $ ( 88 ) ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, 2025 Balance - December 31, 2024 ​ $ 174 Other comprehensive income before reclassifications, net of tax ​ ​ 57 Less amounts reclassified from accumulated other comprehensive (loss) income, net of tax ​ 170 Net other comprehensive loss ​ ​ ( 113 ) Balance - March 31, 2025 ​ $ 61 ​ Included in amounts reclassified from accumulated other comprehensive (loss) income, net of tax for the three months ended March 31, 2025 is $ 76 of realized gain, which is included in “Other income” on the unaudited condensed consolidated statements of income. ​ Note 7–Segment Information ​ The internal reporting structure used by the Company’s chief operating decision maker, or CODM, to assess performance and allocate resources determines the basis for the Company’s operating segments. The Company’s operations are organized under three reporting segments—the Enterprise Solutions segment, which serves primarily medium-to-large corporations; the Business Solutions segment, which serves primarily small- to medium-sized businesses; and the Public Sector Solutions segment, which serves primarily federal, state, and local government and 11 Table of Contents educational institutions. In addition, the Headquarters/Other provides services in areas such as finance, human resources, IT, marketing, and product management. Most of the operating costs associated with the Headquarters/Other functions are charged to the operating segments based on their estimated usage of the underlying functions. The Company reports these charges to the operating segments as “Allocations”. Headquarters/Other amounts that are not allocated to the operating segments are shown as reconciling items in the tables below. ​ The Company’s CODM is its Chief Executive Officer, and he assesses the segments’ performance by using each segments’ operating income (which includes certain corporate overhead allocations attributable to each of the segments). Net sales presented below exclude inter-segment product revenues. The CODM uses operating income for each segment in the annual budget, periodic forecasting, and quarterly results processes. ​ Segment information applicable to the Company’s operating segments and the related reconciliations to consolidated amounts for the three months ended March 31, 2026 and 2025 are shown below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2026 ​ ​ Enterprise Solutions ​ ​ ​ Business Solutions ​ Public Sector Solutions ​ ​ ​ Total Net sales ​ ​ ​ $ 346,471 ​ $ 275,562 ​ $ 99,833 ​ $ 721,866 Cost of sales ​ 296,246 ​ 208,059 ​ 84,823 ​ ​ ​ Personnel costs ​ 17,913 ​ 17,953 ​ 7,802 ​ ​ ​ Marketing ​ ​ 1,755 ​ ​ 3,234 ​ ​ 738 ​ ​ ​ Allocated corporate overhead ​ ​ 18,763 ​ ​ 22,574 ​ ​ 11,285 ​ ​ ​ Depreciation and amortization ​ ​ 197 ​ ​ 154 ​ ​ 16 ​ ​ ​ Other segment expenses 1 ​ ​ 896 ​ ​ 1,703 ​ ​ 1,223 ​ ​ ​ Operating income (loss) ​ $ 10,701 ​ $ 21,885 ​ $ ( 6,054 ) ​ $ 26,532 Unallocated Headquarters/Other expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 6,307 ) Interest income, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,363 Other income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Income before taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 23,588 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment assets ​ $ 835,438 ​ $ 671,750 ​ $ 77,280 ​ $ 1,584,468 Headquarters/Other assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 159,450 ) Consolidated assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,425,018 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2025 ​ ​ Enterprise Solutions ​ ​ ​ Business Solutions ​ Public Sector Solutions ​ ​ ​ Total Net sales ​ ​ ​ $ 298,003 ​ $ 258,385 ​ $ 144,658 ​ $ 701,046 Cost of sales ​ 255,705 ​ 192,978 ​ 125,052 ​ ​ ​ Personnel costs ​ 16,170 ​ 17,775 ​ 9,586 ​ ​ ​ Marketing ​ ​ 2,097 ​ ​ 4,839 ​ ​ 1,084 ​ ​ ​ Allocated corporate overhead ​ ​ 18,290 ​ ​ 21,476 ​ ​ 10,738 ​ ​ ​ Depreciation and amortization ​ ​ 192 ​ ​ 155 ​ ​ 23 ​ ​ ​ Other segment expenses 1 ​ ​ 1,047 ​ ​ 2,745 ​ ​ 1,517 ​ ​ ​ Operating income (loss) ​ $ 4,502 ​ $ 18,417 ​ $ ( 3,342 ) ​ $ 19,577 Unallocated Headquarters/Other expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 5,055 ) Interest income, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,900 Other income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 76 Income before taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 18,498 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment assets ​ $ 743,050 ​ $ 578,687 ​ $ 104,557 ​ $ 1,426,294 Headquarters/Other assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 178,791 ) Consolidated assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 1,247,503 ​ 1) Other segment expenses for each of the reportable segments include service contracts/subscriptions, professional fees, facilities operations, credit card fees, and other miscellaneous expenses. 12 Table of Contents The assets of the Company’s three operating segments presented above consist primarily of accounts receivable, net intercompany receivables, goodwill, and other intangibles, net. Assets reported under the Headquarters/Other are managed by corporate headquarters, including cash and cash equivalents, short-term investments, inventories, property and equipment, ROU assets, and intercompany balance, net. As of March 31, 2026 and 2025, total assets for the Headquarters/Other were presented net of intercompany balance eliminations of $ 39,487 and $ 61,063 , respectively. The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade its management information systems. These information systems serve all of the Company’s segments, to varying degrees, and accordingly, the CODM does not evaluate capital expenditures on a segment-by-segment basis. ​ Note 8–Commitments and Contingencies ​ The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. The outcomes of such matters are not expected to have a material, adverse effect on the Company’s financial position, results of operations, and/or cash flows. ​ The Company is subject to audits by states on sales and income taxes, employment matters, and other assessments. Additional liabilities for these and other audits could be assessed, but such outcomes are not expected to have a material, adverse impact on the Company’s financial position, results of operations, and/or cash flows. ​ Note 9–Bank Borrowings ​ The Company previously had a $ 50,000 credit facility collateralized by its account receivables that expired March 31, 2025 that the Company elected not to renew or replace. Amounts outstanding under the credit facility bore interest at the daily Bloomberg Short-Term Bank Yield Index, or BSBY Rate, plus a spread based on the Company’s funded debt ratio, or in the absence of BSBY Rate, the prime rate ( 7.50 % at March 31, 2025). ​ Cash receipts were automatically applied against any outstanding borrowings. During the three months ended March 31, 2025, the Company borrowed incremental amounts that were each repaid in full. These borrowings for the three months ended March 31, 2025 totaled $ 732 ; however, at no time were the outstanding borrowings greater than the $ 50,000 limit under the credit facility. The Company had no outstanding borrowings under the credit facility immediately prior to the expiration of the credit facility. ​ Note 10–Supplier Finance Programs ​ The Company has agreements with third-party financial institutions, instituted by request of participating suppliers, that allow for the ability to finance payment obligations from the Company. The third-party financial institutions have separate arrangements with the Company’s suppliers and provide them with the option to request early payment for invoices confirmed by the Company. The Company does not determine the terms or conditions of the arrangements between the third-parties and its suppliers and receives no compensation from the third-party financial institutions. The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangements. The payment terms under these arrangements are typical with industry standards and range from 30 to 50 days . The agreements with the financial institutions are collateralized by the inventory purchased through the financing agreements. The Company’s outstanding payment obligations under the supplier finance programs, which are included in accounts payable on the condensed consolidated balance sheets, were $ 95,995 and $ 58,563 at March 31, 2026 and December 31, 2025, respectively. ​ Note 11–Supplemental Cash Flow Information ​ Income tax paid, net of refunds received for the three months ended March 31, 2026 was $ 738 . Income taxes paid for the three months ended March 31, 2025 was $ 3,059 . ​ 13 Table of Contents