ScanSource(SCSC) - 2025 Q3 - Quarterly Report

Financial Performance - Net sales for the quarter ended March 31, 2025, were $704.8 million, a decrease of 6.3% compared to $752.6 million for the same quarter in 2024[19] - Gross profit for the quarter was $100.2 million, representing a gross margin of 14.2%, compared to $94.5 million and a gross margin of 12.6% in the prior year[19] - Net income for the quarter was $17.4 million, an increase of 36.5% from $12.8 million in the same quarter last year[19] - The company reported a basic net income per share of $0.75 for the quarter, up from $0.51 in the prior year[19] - Total revenue for the quarter ended March 31, 2025, was $665,229,000, with recurring revenue contributing $39,618,000[50] - Operating income for the quarter was $22.3 million, an increase of 27.5% from $17.5 million in the same quarter of 2024[95] - Comprehensive income for the quarter was $27.1 million, compared to $8.0 million in the same quarter of 2024[20] Assets and Liabilities - Total assets decreased to $1.725 billion as of March 31, 2025, down from $1.779 billion as of June 30, 2024[16] - Total liabilities decreased to $823.5 million from $854.8 million over the same period[16] - Total current assets decreased to $1.31 billion from $1.40 billion, a decline of 6.7%[16] - Shareholders' equity as of March 31, 2025, was $901.7 million, down from $924.3 million at June 30, 2024[16] - The total debt as of March 31, 2025, was $138,024,000, a decrease from $144,056,000 at June 30, 2024[60] Cash Flow and Expenditures - Cash provided by operating activities for the nine months ended March 31, 2025, was $104,704,000, down from $316,908,000 in 2024, indicating a significant decline of about 66.9%[25] - The company reported capital expenditures of $5,769,000 for the nine months ended March 31, 2025, compared to $7,285,000 in 2024, reflecting a decrease of approximately 20.8%[25] - Total cash and cash equivalents at the end of the period on March 31, 2025, were $146,287,000, down from $159,050,000 at the end of March 2024, a decrease of about 8.5%[25] - The company incurred a net cash used in financing activities of $83,424,000 for the nine months ended March 31, 2025, compared to $203,941,000 in 2024, showing a reduction of approximately 59.0%[25] Segment Performance - Specialty Technology Solutions segment sales were $678.4 million, down 7.0% from $729.8 million year-over-year[95] - Intelisys & Advisory segment sales increased by 16.0% to $26.4 million compared to $22.8 million in the prior year[95] - The company has realigned its operating segments effective July 1, 2024, into Specialty Technology Solutions and Intelisys & Advisory to enhance its hybrid distribution growth strategy[30] Restructuring and Future Plans - The company plans to continue focusing on market expansion and new product development as part of its growth strategy[1] - The Company expects annualized savings of approximately $10.0 million and $10.5 million from restructuring programs initiated in January 2024 and September 2024, respectively[110] Tax and Compliance - The effective tax rate for the quarter ended March 31, 2025, was 28.0%, compared to 28.7% for the same quarter in 2024, reflecting a decrease of 2.4%[105] - The Company had approximately $1.2 million of total gross unrecognized tax benefits as of March 31, 2025, slightly up from $1.1 million at June 30, 2024[107] Foreign Currency and Derivatives - The company experienced a foreign currency translation adjustment gain of $10.1 million for the quarter[20] - The foreign currency translation adjustment resulted in an accumulated other comprehensive loss of $121,653,000 as of March 31, 2025[55] - The Company recorded net foreign exchange derivative contract losses of $1,446 thousand for the quarter ended March 31, 2025, compared to gains of $526 thousand in the same quarter of 2024[70] Goodwill and Intangible Assets - Goodwill increased to $228,835,000 as of March 31, 2025, from $206,301,000 at June 30, 2024, due to additions of $22,776,000[57] - The net identifiable intangible assets rose to $67,815,000 as of March 31, 2025, from $37,634,000 at June 30, 2024[58] Lease Obligations - Operating lease right-of-use assets increased to $11,155,000 as of March 31, 2025, from $9,057,000 as of June 30, 2024, representing a 23.2% increase[99] - Total operating lease costs for the quarter ended March 31, 2025, were $1,511,000, slightly up from $1,507,000 in the same quarter of 2024[100] - Cash paid for lease liabilities during the nine months ended March 31, 2025, was $3,039,000, down from $4,019,000 in the same period of 2024, indicating a 24.4% reduction[100]