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)

ScanSource, Inc. (NASDAQ:SCSC) Q4 2023 Earnings Conference Call August 22, 2023 10:30 AM ET Company Participants Mary Gentry - SVP, IR, & Treasurer Mike Baur - Chairman & CEO John Eldh - President Steve Jones - CFO Conference Call Participants Greg Burns - Sidoti & Company Keith Housum - Northcoast Research Partners Jake Norrison - Raymond James Operator Welcome to the ScanSource Quarterly Earnings Conference Call. All lines have been placed in a listen-only mode, until the question-and-answer session. Toda ...

Financial Performance - Net sales for the fiscal year ended June 30, 2023, totaled $3.79 billion[18] - For the fiscal year ended June 30, 2023, total net sales increased by $257.8 million, or 7.3%, reaching $3,787.7 million compared to $3,529.9 million in fiscal year 2022[165] - The Specialty Technology Solutions segment saw net sales increase by $248.7 million, or 11.9%, primarily due to strong growth in key technologies in North America[167] - The Modern Communications & Cloud segment experienced a net sales increase of $9.1 million, or 0.6%, with adjusted net sales growth of 0.4% after accounting for foreign exchange impacts[168] - The company's operating income for fiscal year 2023 was 3.6%, compared to 3.5% in fiscal year 2022, indicating slight improvement in profitability[162] - Total operating income for fiscal year 2023 was $135.9 million, an increase of $13.7 million or 11.2% compared to the previous year[177] - The company reported a diluted EPS of $3.47 for the year ended June 30, 2023, compared to $3.44 in the previous year, reflecting a growth of 0.03[200] - Gross profit for fiscal year 2023 was $449.2 million, reflecting a $22.7 million increase or 5.3% compared to the prior year[171] - Specialty Technology Solutions segment gross profit increased by $18.5 million, while the gross profit margin decreased to 9.6%[172] - Modern Communications & Cloud segment gross profit increased by $4.2 million, with the gross profit margin rising to 15.4%[173] Customer and Market Dynamics - The company serves approximately 30,000 customers across various industries, with no single customer accounting for more than 4% of total net sales[27] - The company has contracts with over 200 leading telecom carriers and cloud service providers, focusing on empowering sales partners to advise customers on technology and cost savings[54] - Customer relations are critical, and any deterioration in these relationships could negatively impact operating results[111] - The company’s sales organization focuses on developing customer relationships and providing tailored solutions, supported by comprehensive training for sales representatives[68] Operational Strategy - The Specialty Technology Solutions Segment includes recurring revenue from hardware rentals and other SaaS offerings, contributing to the overall revenue[25] - The Modern Communications & Cloud Segment includes recurring revenue from Intelisys and intY businesses, enhancing the company's service offerings[26] - The company aims to drive sustainable, profitable growth through a hybrid distribution strategy leveraging partnerships and technology solutions[20] - The company operates a 741,000 square foot distribution center in Southaven, Mississippi, aiming to ship all orders on the same day to minimize shipping errors[74] - The company operates distribution facilities in the United States and Brazil, supporting its business segments across North America and internationally[152] Employee and Workplace Culture - ScanSource has approximately 2,300 employees, with 1,500 located in the United States and 800 internationally[52] - The company was named one of the Best Places to Work in South Carolina for the eighth consecutive year, reflecting its commitment to employee satisfaction[51] - The company has implemented a work-from-home policy for all employees, maintaining high productivity levels with a largely remote workforce[58] - The company has launched a global digital workplace, The Bridge, to enhance communication and employee engagement[61] - The company emphasizes a comprehensive benefits package, including a 401(k) program with a market-competitive employer match and performance-based bonuses[57] - The company is committed to a diverse and inclusive workplace, led by a Chief Diversity Officer and an internal D&I Advisory Council[59] Risks and Challenges - The company is highly dependent on information and communication systems, and any failure could disrupt business operations and adversely affect financial results[85] - Supply chain issues, including product shortages, may increase costs or delay customer order fulfillment, impacting financial results[88] - Manufacturing interruptions due to factors like labor disputes or natural disasters could further disrupt the supply chain and affect product availability[89] - The company faces credit exposure to customers, and any adverse trends could lead to credit losses, negatively impacting performance[94] - Supplier relationships are critical, and changes in supply agreement terms could adversely affect operating margins and revenue[101] - The company relies on third-party logistics for product delivery, and any failure in these services could disrupt operations and harm customer relationships[97] - Economic factors such as inflation and rising interest rates could restrict the company's ability to raise capital, affecting operations[109] - Economic weakness and geopolitical uncertainty may adversely affect the company's results, leading to reduced demand for products and potential impairments of assets[135] - Intense competition in the market could lead to reduced margins and loss of market share, with competitors having greater resources potentially responding more quickly to market changes[120] - The company may face challenges in adapting to rapid technological changes, which could affect its competitiveness and market share[122] Financial Position and Capital Management - The company has a multi-currency senior secured credit facility with a leverage ratio requirement of less than or equal to 3.50:1.00, which must be maintained[107] - The company has a $350 million revolving credit facility to support its liquidity needs[214] - Cash and cash equivalents totaled $36.2 million as of June 30, 2023, compared to $38.0 million in 2022, with $31.0 million held outside the United States[216] - The company utilizes a weighted average cost of capital (WACC) relative to each reporting unit's geography and industry as the discount rate for estimated future cash flows[214] - The company has never declared or paid a cash dividend, with restrictions on cash dividends under the terms of its credit facility[149] Cybersecurity and Compliance - The company experienced a ransomware attack in May 2023, which interrupted order processing for approximately nine business days and resulted in the disclosure of information on the dark web[129] - A cybersecurity incident on May 14, 2023, impacted sales, with business interruption insurance expected to cover some lost profits[166] - Cybersecurity-related costs amounted to approximately $1.5 million, with insurance expected to cover a portion of these expenses[175] - The company is subject to additional costs and potential fines due to compliance with laws and regulations when selling products to government entities[130] Goodwill and Impairment Testing - As of June 30, 2023, the goodwill balances for the Specialty Technology Solutions and Modern Communications & Cloud reporting units are $16.4 million and $200.3 million, respectively, with fair values exceeding carrying values by 2% and 13%[114] - The company assesses goodwill for impairment annually, with the most recent test indicating no impairment for fiscal years 2023 and 2022[211] - The fair value of the Specialty Technology reporting unit exceeded its carrying value by 2%, while the Modern Communications & Cloud reporting unit exceeded its carrying value by 13% as of the annual goodwill impairment testing date[210]

ScanSource, Inc. (NASDAQ:SCSC) Q3 2023 Earnings Conference Call May 9, 2023 10:30 AM ET Company Participants Mary Gentry - Senior Vice President of Investor Relations, and Treasurer Michael Baur - Chairman, and Chief Executive Officer Stephen Jones - Chief Financial Officer Conference Call Participants Adam Tyler Tindle - Raymond James Gregory John Burns - Sidoti & Company Jake Norrison - Raymond James Keith Michael Housum - Northcoast Research Partners Matthew Sheerin - Stifel Nicolaus Operator Welcome to ...

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 March 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 Greenville, ...

ScanSource, Inc. (NASDAQ:SCSC) Q2 2023 Earnings Conference Call February 7, 2023 10:30 AM ET Corporate Participants Mary Gentry - Senior Vice President, Treasurer and Investor Relations Mike Baur - Chairman and Chief Executive Officer John Eldh - President Steve Jones - Chief Financial Officer Conference Call Participants Greg Burns - Sidoti Keith Housum - Northcoast Research Jake Norrison - Raymond James Mike Latimore - Northland Capital Markets Arthur Winston - Pilot Advisors Operator Welcome to the ScanS ...

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, 2022 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 ...

Investor Presentation November 2022 SAFE HARBOR AND NON-GAAP Safe Harbor Statement This presentation contains certain comments that are "forward-looking" statements about our FY23 outlook, mid-term goals and our operating strategies that involve plans, strategies, economic performance and trends, projections, expectations, costs or beliefs about future events and other statements that are not descriptions of historical facts. Forward-looking information is inherently subject to risks and uncertainties. Any ...

Financial Data and Key Metrics Changes - The company reported net sales of $944 million for Q1, representing a 10% year-over-year increase and record profitability [21] - Non-GAAP diluted EPS reached $1.07, an 8% increase year-over-year, with adjusted EBITDA of $45.3 million, marking a 9% growth [21][25] - Gross profits grew 12% year-over-year to $113 million, with a gross profit margin of 12% [23] Business Line Data and Key Metrics Changes - Specialty Technology Solutions segment saw a 15% year-over-year sales growth, driven by strong demand for hardware technologies [15] - Modern Communications & Cloud segment achieved 3% net sales growth, with Cisco net sales growing nearly 50% year-over-year [16] - Intelisys net revenue increased 7% year-over-year, with double-digit net commission growth expected for the full year [22] Market Data and Key Metrics Changes - The company experienced strong demand from VARs servicing large enterprise customers, particularly in technologies enabling remote work [13] - In Brazil, the company achieved operational excellence and self-funded growth, receiving recognition from the government for compliance [18][19] Company Strategy and Development Direction - The company is focused on hybrid distribution, leveraging relationships with partners to drive growth in both device and digital solutions [12] - The hybrid strategy has enabled the company to build a recurring revenue stream, now accounting for approximately 24% of gross profits [7][23] - The company aims to maintain double-digit year-over-year net sales growth for Intelisys, driven by strong partner relationships [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory of sustainable, profitable growth, despite ongoing supply chain challenges [19] - The company reaffirmed its full-year 2023 outlook of at least 5.5% year-over-year net sales growth and at least $174 million for adjusted EBITDA [33][34] Other Important Information - The company amended its credit facility for $500 million, providing financial flexibility to support growth opportunities [32] - The company utilized operating cash of $48 million for the quarter, with a significant increase in accounts receivable and inventory levels [27][30] Q&A Session Summary Question: Insights on net sales growth in Modern Communications - Management noted a 26% year-over-year decrease in on-prem communications, primarily due to three suppliers [38] Question: Gross profit decline explanation - The decline was attributed to a mix issue, with Cisco's lower margin impacting overall gross profit growth [41] Question: Demand trends in Technology segment - Demand is driven by automation, worker productivity, mobility, and physical security, continuing from pandemic-related needs [42] Question: Visibility for the next quarter in barcode and mobility - Management expressed excitement about strong demand and inventory flows, supported by enthusiasm from partners at a recent conference [45] Question: Sustainability of Cisco growth - Management believes the growth in the Modern Communications segment is sustainable, supported by strong relationships and new partner acquisitions [48][49]