ScanSource (SCSC) came out with quarterly earnings of $0.80 per share, missing the Zacks Consensus Estimate of $0.95 per share. This compares to earnings of $0.76 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of -15.79%. A quarter ago, it was expected that this technology products distributor would post earnings of $0.84 per share when it actually produced earnings of $0.69, delivering a surprise of -17.86%. Over the last four ...

Market Overview - U.S. stocks showed mixed performance with the Dow Jones index gaining over 50 points, up 0.16% to 41,240.52, while NASDAQ fell 0.42% to 17,651.68 and S&P 500 dropped 0.22% to 5,604.73 [1] - Health care shares increased by 0.2%, while information technology shares decreased by 0.6% [1] Company Performance - ScanSource, Inc. reported fourth-quarter earnings of 80 cents per share, missing the analyst consensus estimate of 93 cents, and quarterly sales of $746.113 million, below the expected $843.143 million [2] - ScanSource projected FY25 revenues between $3.1 billion and $3.5 billion, compared to estimates of $3.47 billion [2] - Ensysce Biosciences, Inc. shares surged 66% to $0.7176 after receiving a $14 million grant from the NIH for opioid development [2] - Addex Therapeutics Ltd shares rose 64% to $12.25 following the selection of clinical candidates in collaboration with Indivior, with potential earnings of up to $330 million [2] - VOXX International Corporation shares increased by 50% to $4.25 after announcing a strategic alternatives process [2] Declining Stocks - Altisource Asset Management Corporation shares fell 47% to $1.25 due to plans to voluntarily delist from NYSE American LLC [3] - COSCIENS Biopharma Inc. shares dropped 35% to $3.80 after announcing Phase 3 trial results [3] - Lixte Biotechnology Holdings, Inc. shares decreased by 15% to $1.75 [3] Commodities - Oil prices decreased by 1% to $76.67, gold fell by 0.4% to $2,545.10, silver dropped by 0.3% to $29.92, while copper rose by 0.3% to $4.2915 [4] European Market - European shares were mostly higher, with the eurozone's STOXX 600 gaining 0.1%, Germany's DAX up 0.4%, and France's CAC 40 down 0.2% [5] - The German economy contracted by 0.1% quarter-over-quarter in Q2, following a 0.2% growth in Q1 [5] - The GfK Consumer Climate Indicator for Germany fell to -22.0 in September from a revised -18.6 [5] Asia Pacific Markets - Asian markets closed mostly higher, with Japan's Nikkei 225 gaining 0.47% and Hong Kong's Hang Seng Index up 0.43% [6] - Hong Kong's trade deficit narrowed to $21.8 billion in July from a $30 billion gap a year ago, as exports increased more than imports [6] Economic Indicators - The S&P CoreLogic Case-Shiller home price index rose by 6.5% year-over-year in June, down from a revised 6.9% in the previous month [7] - The FHFA house price index fell by 0.1% in June, contrary to market expectations of a 0.2% gain [7]

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ScanSource, Inc. (NASDAQ:SCSC) Q3 2024 Earnings Conference Call May 7, 2024 10:30 AM ET Company Participants Mary Gentry - Senior Vice President, Treasurer and Investor Relations Mike Baur - Chair and Chief Executive Officer Steve Jones - Senior Executive Vice President, Chief Financial Officer Tony Sorrentino - President for Specialty Technology Conference Call Participants Greg Burns - Sidoti Keith Housum - Northcoast Research Michael Latimore - Northland Capital Markets Operator Welcome to the ScanSource ...

Financial Performance - For the quarter ended March 31, 2024, net sales were $752.6 million, a decrease of 15% compared to $885.5 million for the same quarter in 2023[17] - Gross profit for the quarter was $94.5 million, down 15% from $111.8 million in the prior year, resulting in a gross margin of 12.5%[17] - Net income for the quarter was $12.8 million, a decline of 40% from $21.2 million in the same quarter last year, leading to a net income per share of $0.51[17] - Total revenue for the nine months ended March 31, 2024, was $2,513,696 thousand, compared to $2,840,573 thousand for the same period in 2023, reflecting a decrease of 11.4%[47] - Net income for the nine months ended March 31, 2024, was $60,964,000, a decrease of 14.3% compared to $70,997,000 for the same period in 2023[24] - For the quarter ended March 31, 2024, net income was $12,806 thousand, a decrease of 39.8% compared to $21,221 thousand for the same quarter in 2023[49] - Basic earnings per share for the quarter ended March 31, 2024, was $0.51, down from $0.84 in the same quarter of 2023, a decrease of 39.3%[49] Assets and Liabilities - Total current assets decreased to $1.42 billion as of March 31, 2024, from $1.66 billion as of June 30, 2023, primarily due to a reduction in accounts receivable and inventories[14] - Total liabilities decreased to $838.9 million as of March 31, 2024, from $1.16 billion as of June 30, 2023, reflecting a reduction in accounts payable and long-term debt[14] - Cash and cash equivalents increased significantly to $159.1 million as of March 31, 2024, compared to $36.2 million as of June 30, 2023[14] - The company’s total assets decreased to $1.78 billion as of March 31, 2024, from $2.07 billion as of June 30, 2023[83] - The total debt as of March 31, 2024, was $145,881 thousand, significantly reduced from $329,901 thousand on June 30, 2023[56] Operational Changes and Restructuring - The company reported a restructuring expense of $3.9 million for the quarter, indicating ongoing efforts to optimize operations[17] - A restructuring program initiated in January 2024 is expected to yield approximately $10.0 million in annualized savings in selling, general and administrative expenses[100] - The balance of accrued restructuring costs as of March 31, 2024, was $2.8 million, expected to be paid through the third quarter of fiscal year 2025[103] - Employee separation and benefit costs amounted to $3.923 million for the quarter ended March 31, 2024[101] - The total restructuring costs recognized for the nine months ended March 31, 2024, are also $3.923 million, all allocated to the Corporate reporting unit[101] Market Conditions and Future Outlook - The company anticipates continued challenges from macroeconomic conditions, including inflation and supply chain issues, which may impact future performance[11] - The company is focused on enhancing its organic growth strategy and managing credit risks associated with larger customers and suppliers[11] Cash Flow and Investments - Cash flows from operating activities provided $316,908,000 in the nine months ended March 31, 2024, compared to a cash outflow of $20,508,000 in the same period of 2023[24] - The company reported a capital expenditure of $7,285,000 for the nine months ended March 31, 2024, compared to $6,549,000 in the same period of 2023[24] - Common stock repurchased amounted to $21,168,000 in the nine months ended March 31, 2024, compared to $10,718,000 in the same period of 2023[24] Segment Performance - Specialty Technology Solutions sales decreased to $483.7 million in Q1 2024 from $565.7 million in Q1 2023, a decline of 14.5%[83] - Modern Communications & Cloud segment sales fell to $268.9 million in Q1 2024 from $319.9 million in Q1 2023, representing a decrease of 15.9%[83] - Operating income for the Modern Communications & Cloud segment was $12.99 million in Q1 2024, compared to $14.47 million in Q1 2023, a decrease of 10.3%[83] Tax and Compliance - The company reported a discrete net tax benefit of $1.5 million during Q1 2024, related to an income tax recovery in Brazil[93] - The company's effective tax rate for Q1 2024 was 28.7%, compared to 29.1% in Q1 2023[94] - The Company was in compliance with all covenants under the Amended Credit Agreement, including a Leverage Ratio of less than or equal to 3.50 to 1.00[60]

Financial Performance - Net sales for Q3 FY24 totaled $752.6 million, a decrease of 15.0% year-over-year from $885.5 million in Q3 FY23[2] - Gross profit for Q3 FY24 was $94.5 million, down 15.5% year-over-year, with a gross profit margin of 12.55% compared to 12.62% in Q3 FY23[4] - Operating income for Q3 FY24 was $17.5 million, a decline of 48.8% from $34.3 million in the prior-year quarter[5] - GAAP net income for Q3 FY24 was $12.8 million, or $0.50 per diluted share, down 39.7% from $21.2 million, or $0.83 per diluted share, in Q3 FY23[6] - Adjusted EBITDA for Q3 FY24 decreased 27.5% to $33.1 million, representing 4.40% of net sales, compared to 5.16% in Q3 FY23[7] - Total net sales for the quarter ended March 31, 2024, were $752.6 million, a decrease of 15.0% compared to $885.5 million in the same quarter of 2023[27] - Gross profit for the quarter was $94.5 million, down from $111.8 million year-over-year, reflecting a gross margin decline[27] - Operating income decreased to $17.5 million from $34.3 million in the prior year, indicating a significant drop in profitability[27] - Net income for the quarter was $12.8 million, compared to $21.2 million in the same quarter of 2023, representing a decline of 39.9%[27] - Consolidated net sales reported a decline of 15.0% to $752,599,000, with non-GAAP net sales at $748,802,000, down 15.2% from $882,989,000 in the same quarter of 2023[39] - Operating income for the quarter was $17,542,000, significantly lower than $34,279,000 in the same quarter last year[41] - Net income decreased to $12,806,000 from $21,221,000 year-over-year, reflecting a decline of 39.9%[41] - Diluted EPS for the quarter was $0.50, down from $0.83 in the same quarter of 2023[43] Cash Flow and Financial Position - Free cash flow for the first nine months of FY24 was $309.6 million, significantly higher than $52.6 million in the same period last year[7] - Cash and cash equivalents increased to $159.1 million from $36.2 million at the end of the previous quarter, showing strong cash flow management[29] - Free cash flow for the nine months ended March 31, 2024, was $309.6 million, a significant improvement from a negative cash flow of $27.1 million in the same period of 2023[34] - The company emphasizes a strong balance sheet and robust free cash flow, providing flexibility for disciplined capital allocation plans[2] Outlook and Guidance - The updated annual outlook for FY24 projects net sales of at least $3.3 billion, down from the previous guidance of at least $3.5 billion[8] - The fiscal year 2024 outlook includes a GAAP operating income of at least $96 million and adjusted EBITDA of at least $140 million[44] - Free cash flow is projected to be at least $275 million for fiscal year 2024[44] Shareholder Actions - A new $100 million share repurchase authorization was announced, supplementing the existing authorization with approximately $45 million remaining[9] Segment Performance - Intelisys net sales for Q3 FY24 increased by 4.0%, with net billings reaching approximately $2.68 billion annualized[3] - Net sales in the Specialty Technology Solutions segment were $483.7 million, down 14.5% year-over-year, while the Modern Communications & Cloud segment saw a 15.9% decline in sales[36] - Net sales in the United States and Canada decreased by 17.0% to $671,246,000 compared to $808,797,000 in the same quarter of 2023[39] - International net sales increased by 6.0% to $81,353,000, with non-GAAP net sales at $77,556,000, up 4.5% from $74,192,000 in the previous year[39] Operational Adjustments - The company reported a restructuring charge of $3.9 million during the quarter, indicating ongoing adjustments to operational efficiency[27] - SG&A expenses for the quarter were $66,574,000, compared to $70,669,000 in the same quarter last year[41] - The adjusted return on invested capital (ROIC) for the quarter was 12.1%, down from 14.6% in the prior year[32] - The company experienced a foreign exchange impact of $(3,797,000) on its international sales[39]

Financial Data and Key Metrics Changes - For Q2 2024, the company reported net sales of $885 million, a decline of 12.5% year-over-year, with adjusted EBITDA expected to be at least $155 million, reflecting an EBITDA margin of 4.4% [4][5][32] - Free cash flow for the quarter was $61 million, with a full-year outlook of at least $200 million [2][5][6] - Gross profit margins were reported at 11.4%, consistent with the prior year [4] Business Line Data and Key Metrics Changes - The Intelisys Technology Services business saw a growth of 7.5%, with end user billings increasing 10% year-over-year, exceeding $2.6 billion annualized [2][30] - The Specialty Technology & Solutions segment experienced a revenue decline of 17% year-over-year, with a corresponding decline in gross profit [4] - The Modern Communication and Cloud segment's revenues declined 5% year-over-year, with gross profits down 9% due to an unfavorable product mix [32] Market Data and Key Metrics Changes - Demand for hardware technologies, particularly in barcode, mobility, point-of-sale, security, and communications, declined more than expected [12] - The company noted a slowdown in physical security and mobility point-of-sale technologies, which were previously experiencing strong growth [4][35] Company Strategy and Development Direction - The company is focusing on building a cash culture and sustainable free cash flow, with plans to redirect resources towards the Intelisys recurring revenue business [5][6] - The updated guidance reflects expectations of continued revenue headwinds, with net sales projected to be at least $3.5 billion for FY 2024 [5] - The company is actively managing SG&A spending to align with revenue growth expectations [5] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over lower-than-expected net sales in the hardware business, attributing it to changing demand dynamics [2][4] - The company anticipates ongoing challenges in forecasting demand due to the lack of backlogs and bookings, emphasizing the need for cautious guidance [3][41] - Management remains confident in the resilience of the business and its positioning for a return to growth [5] Other Important Information - The company has an active pipeline of M&A opportunities and plans to maintain a balance between share repurchases and strategic investments [52] - The effective tax rate for FY 2024 is expected to range from 27% to 28% [5] Q&A Session Summary Question: Observations on technology cycles and demand - Management acknowledged a slowdown in networking business growth but noted it still experienced some growth year-over-year [35] Question: Impact of self-checkout kiosks on demand - Management confirmed a slowdown in self-checkout business but remains optimistic about future opportunities in point-of-sale technologies [18] Question: Capital allocation priorities - Management stated that capital allocation focuses on share repurchases and M&A to drive recurring revenue, with $65 million remaining on the current authorization [50][52]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ Quarterly period ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 000-26926 ScanSource, Inc. South Carolina (State of Incorporation) 57-0965380 (I.R.S. Employer Identification No.) 6 Logue Court Greenvil ...

Scansource, Inc. (NASDAQ:SCSC) Q1 2024 Earnings Conference Call November 9, 2023 10:30 AM ET Company Participants Mary Gentry - VP, IR & Treasurer Michael Baur - Founder, Chairman & CEO Stephen Jones - Senior EVP & CFO Conference Call Participants Gregory Burns - Sidoti & Company Adam Tindle - Raymond James & Associates Michael Latimore - Northland Capital Markets Operator Welcome to the ScanSource quarterly earnings conference call. [Operator Instructions]. I would now like to turn the call over to Mary Ge ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$1.90 billion** and liabilities to **$983.3 million** as of September 30, 2023 Condensed Consolidated Balance Sheets (unaudited) | (In thousands) | September 30, 2023 | June 30, 2023 | | :--- | :--- | :--- | | **Total current assets** | $1,507,435 | $1,657,075 | | **Total assets** | **$1,898,535** | **$2,068,169** | | **Total current liabilities** | $701,049 | $786,801 | | **Total liabilities** | **$983,282** | **$1,162,871** | | **Total shareholders' equity** | **$915,253** | **$905,298** | [Condensed Consolidated Income Statements](index=7&type=section&id=Condensed%20Consolidated%20Income%20Statements) Net sales decreased to **$876.3 million** and net income to **$15.4 million** for the quarter ended September 30, 2023 Condensed Consolidated Income Statements (unaudited) | (In thousands, except per share data) | Quarter ended Sep 30, 2023 | Quarter ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net sales** | $876,305 | $943,813 | | **Gross profit** | $106,508 | $113,485 | | **Operating income** | $24,084 | $34,888 | | **Net income** | **$15,432** | **$24,042** | | **Net income per common share, diluted** | **$0.61** | **$0.94** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$93.5 million** for the quarter ended September 30, 2023 Condensed Consolidated Statements of Cash Flows (unaudited) | (In thousands) | Quarter ended Sep 30, 2023 | Quarter ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $93,533 | $(48,459) | | **Net cash used in investing activities** | $(2,315) | $(684) | | **Net cash (used in) provided by financing activities** | $(83,493) | $52,970 | | **Increase in cash and cash equivalents** | $6,469 | $2,485 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies, revenue recognition, debt, and segment performance - The company operates as a hybrid distributor in two segments: Specialty Technology Solutions and Modern Communications & Cloud, serving markets in the US, Canada, Brazil, and the UK[27](index=27&type=chunk) Disaggregation of Revenue by Segment (Q3 2023) | (in thousands) | Specialty Technology Solutions | Modern Communications & Cloud | Total | | :--- | :--- | :--- | :--- | | Hardware, software and cloud (excl. Intelisys) | $509,570 | $346,232 | $855,802 | | Intelisys connectivity and cloud | — | $20,503 | $20,503 | | **Total** | **$509,570** | **$366,735** | **$876,305** | Segment Operating Income (Q3 2023 vs Q3 2022) | (in thousands) | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Specialty Technology Solutions | $11,872 | $21,852 | | Modern Communications & Cloud | $12,413 | $13,036 | | Corporate | $(201) | — | | **Total Operating Income** | **$24,084** | **$34,888** | [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the quarter ended September 30, 2023, covering sales, income, non-GAAP metrics, and liquidity [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net sales decreased by **7.2%** year-over-year, primarily in Specialty Technology Solutions, with operating income falling **31.0%** Net Sales by Segment (YoY Change) | Net Sales by Segment (in thousands) | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Specialty Technology Solutions | $509,570 | $576,329 | (11.6)% | | Modern Communications & Cloud | $366,735 | $367,484 | (0.2)% | | **Total net sales** | **$876,305** | **$943,813** | **(7.2)%** | - The decrease in Specialty Technology Solutions sales was primarily due to lower sales volumes in mobility and barcoding, partially offset by increased networking and security sales[101](index=101&type=chunk) - SG&A expenses increased by **$3.8 million (5.4%)** primarily due to higher bad debt expense from increases in specific customer reserves[107](index=107&type=chunk) - Interest expense increased **62.0%** to **$5.6 million**, driven by higher interest rates and higher average borrowings[113](index=113&type=chunk) [Non-GAAP Financial Information](index=29&type=section&id=Non-GAAP%20Financial%20Information) The company provides non-GAAP metrics, including operating income, diluted EPS, and Adjusted ROIC, for a clearer view of performance GAAP vs. Non-GAAP EPS (Diluted) | (per share data) | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | **GAAP Diluted EPS** | **$0.61** | **$0.94** | | Intangible amortization | $0.12 | $0.12 | | Cyberattack restoration costs | $0.01 | — | | **Non-GAAP Diluted EPS** | **$0.74** | **$1.07** | Adjusted Return on Invested Capital (ROIC) | | Quarter ended Sep 30, 2023 | Quarter ended Sep 30, 2022 | | :--- | :--- | :--- | | **Adjusted ROIC, annualized** | **11.0%** | **15.6%** | Reconciliation to Adjusted EBITDA (in thousands) | | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net income (GAAP) | $15,432 | $24,042 | | Plus: Interest, Taxes, D&A | $16,517 | $18,917 | | EBITDA (non-GAAP) | $31,949 | $42,959 | | Plus: Share-based comp, Cyberattack costs | $2,970 | $2,316 | | **Adjusted EBITDA (non-GAAP)** | **$34,919** | **$45,275** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by strong operating cash flow and a **$350 million** revolving credit facility, with **$251.9 million** available Cash Flow Summary (in thousands) | | Quarter ended Sep 30, 2023 | Quarter ended Sep 30, 2022 | | :--- | :--- | :--- | | **Operating activities** | $93,533 | $(48,459) | | **Investing activities** | $(2,315) | $(684) | | **Financing activities** | $(83,493) | $52,970 | - Net working capital decreased by **$63.9 million** during the quarter, primarily from decreases in inventory attributable to lower sales volume and a working capital improvement plan[136](index=136&type=chunk) - The company has a **$350 million** multicurrency senior secured revolving credit facility and a **$150 million** senior secured term loan facility, both maturing on September 28, 2027[142](index=142&type=chunk) - As of September 30, 2023, there was **$251.9 million** available for additional borrowings under the revolving credit facility[146](index=146&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risks have occurred since the disclosures in its June 30, 2023 Annual Report on Form 10-K - No material changes have occurred to the company's market risks since June 30, 2023[151](index=151&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - Based on an evaluation, management concluded that disclosure controls and procedures were effective as of September 30, 2023[153](index=153&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[153](index=153&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits but does not expect any material adverse effect on its financial condition or operations - The company does not expect any current lawsuits to have a material adverse effect on its financial condition or results of operations[155](index=155&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's June 30, 2023 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023 have occurred[157](index=157&type=chunk) [Share Repurchases and Dividends](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a **$100 million** share repurchase program with **$66.2 million** remaining, and no cash dividends have been paid - As of September 30, 2023, approximately **$66.2 million** remained available for purchase under the company's share repurchase program[158](index=158&type=chunk) - The company has never declared or paid a cash dividend, and its credit facility restricts the payment of cash dividends[159](index=159&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) CEO Michael Baur adopted a Rule 10b5-1 trading plan on September 2, 2023, for the potential sale of up to **427,001** shares - On September 2, 2023, CEO Michael Baur adopted a Rule 10b5-1 trading plan for the sale of up to **427,001** shares of common stock, effective until November 20, 2024[160](index=160&type=chunk)