PC Connection, Inc. (NASDAQ:CNXN) Q1 2023 Earnings Call Transcript

Timothy McGrath: So thanks, Jake. It’s a good question. Given this market environment, there’s a little uncertainty around that. Clearly, the state, local and education side of the business has been under more pressure. We do expect that the expiring ECF funds that expires, excuse me, in June of this year, make me give us a little more momentum for Q2. So we’re working that actively. And as I mentioned, our federal contracts, we expect will continue to roll out throughout Q2 and into Q3. So we’re fairly confident there that there is a lot of pressure on the SLED side. Tom?

Thomas Baker: Yes. I think kind of we talked about April a little bit. And just from a shipment perspective, year-over-year, the SLED business did appear to hold up fairly well on a relative basis. So I’m a little hopeful going into their typical SLED busy season that things will continue to hold together.

Jake Norrison: Okay. Perfect. And then last one for me, just wanted to double click on capital allocation real quick. In terms of M&A, what are you looking for there? What sort of characteristics or technologies are you talking on — just more color on that would be helpful.

Timothy McGrath: Yes, so we are starting to see valuations come down, albeit it’s a good start. But clearly, when it comes to M&A, we remain very focused on tuck-in acquisitions that give us good solutions, additional capability. So areas would include, from our perspective, cloud, security and, of course, that advanced technology focused space.

Jake Norrison: Perfect, thanks so much.

Timothy McGrath: Thank you, Jake.

Operator: Thank you. At this time, I would like to turn it back to Tim McGrath, President and Chief Executive Officer for closing remarks.

Timothy McGrath: Thanks, Gerald. I’d like to thank all of our customers, vendor partners and shareholders for their continued support. And once again, our coworkers for their efforts and extraordinary dedication. I’d also like to thank those of you listening to our call this afternoon. Your time and interest in Connection are appreciated. Have a great evening.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.