PC Connection Earned $81.8 Million In Nine Months, Yet Operations Burned $39.8 Million In Cash
Receivables and inventory ate the cash as profit climbed, and cash and equivalents fell to $124.6 million from $193.2 million at year-end.
PC Connection, which sells IT hardware, software and services to businesses and public institutions, earned $81.8 million in the first nine months of 2026, up from $63.0 million, but operations consumed $39.8 million in cash against a $38.0 million inflow a year earlier, according to its 10-Q filed Wednesday.
Where the cash went
Customer receivables absorbed $144.8 million of cash, against $6.5 million a year earlier. Inventories took $83.0 million, versus $40.0 million. Payables offset part of that, supplying $74.5 million against $11.9 million.
The company ties the inventory build to "bringing in inventory for several large scale customer deployments" and the receivables swing to the timing of customer deliveries. Payables include supplier-finance obligations of $65.9 million, up from $58.6 million at December 31, 2025.
The cash conversion cycle, the days it takes to turn purchases into collected cash, lengthened to 50 days from 46 a year earlier. Days of supply in inventory rose to 29 from 22.
Record sales, thinner margin
Net sales for the third quarter rose 23.3% to $874.3 million, and quarterly net income reached $31.5 million, the earnings release shows. Gross margin slid to 18.5% from 19.6% in the quarter. Nine-month income from operations was $104.2 million, compared with $75.7 million.
The company says it has bought product ahead of customer orders because of the global memory shortage and tariff-related cost risk. Cash and equivalents ended September at $124.6 million, down from $193.2 million at year-end, even after $15.1 million of dividend payments. It also held $218.7 million in short-term investments.
Federal sales fall, new president arrives
Public Sector sales to the federal government fell $53.3 million, or 46.7%, in the nine months, which the company attributes to a few large orders in the prior period that did not repeat. The segment posted a $6.5 million operating loss.
Matthew Zafirovski started October 12, 2026, as the company's new president and COO. Timothy McGrath ceased serving as President but remains CEO.
The company's headquarters lease with a related party has expired, and it occupies the space month to month. It says it intends to sign a written long-term lease. The board declared a $0.20 quarterly dividend payable November 27.
The company says it expects operations to generate cash by managing inventories and receivables against payables.
Sources
- 10-Q Filing — PC Connection (CNXN) — SEC EDGAR
- 10-Q Filing — PC Connection (CNXN), Q2 FY2026 filed 2026-07-29 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, cnxn-ex99d1.htm) — PC Connection, filed 2026-10-28 — SEC EDGAR
- Is PC Connection (CNXN) Stock Already Pricing In Too Much Earnings Hope? — Yahoo Finance
