ScanSource (NasdaqGS:SCSC) Q2 2026 Earnings call February 05, 2026 10:30 AM ET Company ParticipantsAdam Tindle - Managing DirectorGuy Hardwick - DirectorMary Gentry - Senior VP, Finance and TreasurerMike Baur - CEOSteve Jones - Senior EVP and CFOConference Call ParticipantsGreg Burns - Senior AnalystKeith Housum - Managing Director and Research AnalystOperatorWelcome to the ScanSource quarterly earnings conference call. All lines have been placed in a listen-only mode until the question-and-answer session. ...

ScanSource (NasdaqGS:SCSC) Q2 2026 Earnings call February 05, 2026 10:30 AM ET Speaker6Welcome to the ScanSource quarterly earnings conference call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mary Gentry, Senior Vice President, Finance and Treasurer. Please go ahead.Speaker4Good morning, and thank you for joining us. Our call wi ...

Core Viewpoint - ScanSource, Inc. plans to release its second quarter fiscal year 2026 results on February 5, 2026, at approximately 8:30 a.m. ET, followed by an earnings conference call at 10:30 a.m. ET on the same day [1] Company Information - ScanSource, Inc. is a leading technology distributor that focuses on addressing complex, converging technologies [1]

Core Insights - D&H has formed a significant partnership with Fortinet, integrating its security suite into the D&H Advanced Solutions+ ecosystem, enhancing opportunities for U.S. channel partners [1][3] - The partnership aims to empower various types of partners, including VARs, CSPs, MSPs, MSSPs, and enterprise-focused solution providers, by providing access to technology, expertise, and resources necessary for client support across all market segments [1][3] D&H FWD Enablement Program - D&H is launching the FWD (Forward) enablement program to help partners master and monetize Fortinet's advanced security technologies, designed to accelerate business growth and establish market leadership [2] - Key benefits of the FWD program include structured training paths, hands-on technical workshops, dedicated Fortinet expertise, and comprehensive go-to-market resources [6] D&H's Position and Strategy - D&H is recognized as a leading technology distributor in North America, catering to a wide range of organizations from SMBs to enterprises, and is focused on delivering innovative IT solutions [4] - The company emphasizes a "Built for Growth" mindset, providing customized services and consultative support to help partners capitalize on market opportunities [5]

Market Overview - Major U.S. equity indices experienced slight declines, with the Dow Jones Industrial Average down 20.23 points (0.04%) to 48,710.97, the S&P 500 down 2.11 points (0.03%) to 6,929.94, and the Nasdaq Composite down 20.21 points (0.09%) to 23,593.10, attributed to profit-booking in technology sectors [1][2] Investment Strategy - The current market environment suggests a prudent risk management approach, focusing on portfolio rebalancing rather than aggressive pursuit of gains, especially as the year-end approaches [2] - Companies with strong cash flows, reasonable valuations, and resilient business models are seen as compelling investment opportunities amid macroeconomic uncertainties [3] Valuation Metrics - The Price to Cash Flow (P/CF) ratio is highlighted as an effective valuation metric, with companies like The AES Corporation, ScanSource, PG&E Corporation, and EnerSys showing low P/CF ratios, indicating better financial health [4][5] - Positive cash flow is essential for a company's liquidity, enabling it to manage debt, reinvest, and undertake shareholder-friendly actions, while negative cash flow indicates reduced liquidity and flexibility [7] Value Stock Selection - A comprehensive investment strategy should include multiple valuation metrics such as price-to-book, price-to-earnings, and price-to-sales ratios, along with a favorable Zacks Rank and Value Score to avoid value traps [8] - Parameters for selecting true-value stocks include a P/CF ratio less than or equal to the industry median, a minimum stock price of $5, and a Zacks Rank of 1 or 2 [9][13] Company Performance - The AES Corporation has a Zacks Rank 2, with a trailing four-quarter earnings surprise of 14.7% and a projected sales growth of 4.7% for the current financial year [14][15] - ScanSource, also with a Zacks Rank 2, has a trailing earnings surprise of 8.9% and expected sales growth of 3.9% [15][16] - PG&E Corporation holds a Zacks Rank 2, with a trailing earnings surprise of 0.5% and projected sales growth of 6% [16][17] - EnerSys, carrying a Zacks Rank 2, has a trailing earnings surprise of 4.9% and expected sales growth of 4% [17][18]

Summary of ScanSource Conference Call (December 09, 2025) Company Overview - **Company**: ScanSource (NasdaqGS:SCSC) - **Industry**: Technology Hardware Distribution Key Points and Arguments Company Evolution - ScanSource has transformed from a traditional technology hardware distributor to a more diversified business model since 2016, focusing on higher-margin recurring revenue streams [4][12][15] - The company initially operated on single-digit margins but maintained 10% gross margins for many years [6][10] - In 2016, ScanSource identified a new channel of partners called agents, which allowed them to tap into recurring revenue models [13][14] Strategic Direction - The company is focusing on the convergence of hardware, software, and services, aiming to provide a comprehensive solution to end users [16][18] - ScanSource is working to educate its partners on selling converged solutions, which include both hardware and recurring services [19][23] Competitive Environment - The competitive landscape includes various partners, with ScanSource often working with only one of them, indicating a fragmented market [21] - The company aims to differentiate itself by being a unique distributor that combines hardware and recurring revenue services, unlike its competitors [29][30] Financial Segments - ScanSource has two main segments: Specialty Hardware and Intelisys, each with different sales models and margin profiles [24][26] - Specialty Hardware has traditional hardware margins (3%-4% EBITDA margins), while Intelisys has high gross margins (almost 100%) and EBITDA margins between 30%-40% [26][27] - Intelisys now contributes approximately 25% of gross profit dollars, highlighting its importance to the overall financial health of the company [27] Market Demand and Trends - Recent demand has been disappointing, with larger orders being broken into smaller chunks due to IT budget constraints, particularly influenced by AI projects [36][37] - Price increases due to tariffs have generally benefited the channel, but there are concerns about the long-term impact on demand [39][40] Growth Outlook - Key growth areas include physical security (IP-enabled cameras) and networking, with expectations for continued demand in these sectors [42][43] - The company is focused on gross profit dollar growth of 5%-6% over the next three years and aims to improve EBITDA margins [47][48] Capital Allocation and M&A - ScanSource is actively repurchasing shares and pursuing small acquisitions to enhance its product offerings, such as the recent acquisition of DataZoom [52][53] - The company sees potential for further investments in the Intelisys channel, which is attracting private equity interest [54] Investor Messaging - The company believes its Intelisys business is undervalued compared to the broader market, with potential for significant growth driven by private equity investments [54] Additional Important Insights - The transition to a cash culture has improved inventory management, allowing ScanSource to buy only what is necessary [41] - The company is adapting its sales strategies to align with the new recurring revenue model, which requires changes in compensation structures for sales personnel [31][34]

Arrow Electronics Conference Call Summary Company Overview - **Company**: Arrow Electronics (NYSE:ARW) - **Date**: December 02, 2025 - **Speaker**: Bill Austin, Interim President and CEO Key Industry Insights - **Market Position**: Arrow is a leading distributor in the global electronics and enterprise IT ecosystems, serving large end markets such as industrial, transportation, aerospace and defense, medical, consumer electronics, and data center [2][5] - **Market Growth**: The distribution total addressable market (DTAM) for Arrow's core distribution business exceeds $250 billion, with the existing product distribution market growing at an annual rate of 6-10% [8][9] Core Business Strategies 1. **Investment Thesis**: Arrow's investment strategy is built on four pillars: - Leading position in expanding markets - Shift towards higher-margin value-added services - Diversified business model providing financial flexibility - Focused capital allocation strategy [2][4] 2. **Value-Added Services**: The company is increasing its mix of higher-margin services, which now account for approximately 30% of total operating income, up from less than 20% historically [9][10] 3. **Global Components Business**: This segment represents roughly 70% of total revenue, focusing on semiconductors and interconnects, with a strong emphasis on value-added solutions [6][7] 4. **Enterprise Component Solutions (ECS)**: Comprising about 30% of total revenue, ECS delivers hybrid cloud infrastructure, cybersecurity, and AI-driven solutions, with a significant portion of billings now coming from software and services [22][23] Financial Performance - **Free Cash Flow**: Arrow has generated approximately $3.1 billion in free cash flow over the last five years, demonstrating resilience across market cycles [29] - **Capital Allocation**: Since 2020, Arrow has returned about $3.5 billion to shareholders through share repurchases, representing roughly one-third of outstanding shares [5][31] Operational Excellence - **Productivity Initiatives**: Arrow is focused on simplifying operations and consolidating resources to drive cost efficiencies and reinvestment capacity for growth [4] - **Customer Engagement**: The company aims to deepen customer relationships through its value-added services, which enhance supply chain visibility and accelerate time to market [11][17] Future Outlook - **Market Trends**: Arrow is well-positioned to benefit from secular trends in cloud, AI, automation, and electrification, which are driving demand in core end markets [8][29] - **Strategic Partnerships**: The company is evolving its role from a traditional distributor to a strategic partner, enabling technology makers to focus on innovation while Arrow manages go-to-market complexities [24][25] Conclusion - Arrow Electronics is strategically positioned to leverage its diversified business model and operational strengths to create long-term value for shareholders, with a clear focus on higher-margin offerings and sustainable growth in expanding markets [31][32]

Core Insights - The 10-year U.S. Treasury yield has stabilized around 4.1%, indicating a consolidation phase influenced by growth and inflation expectations [1][2][11] - Industrial stocks are expected to perform well in this stable yield environment, as it fosters a predictable setting for capital investment and borrowing [3][4][11] Treasury Yield Analysis - The yield fluctuated between approximately 3.97% and 4.18% over the past two months, reflecting investor sentiment regarding economic growth and Federal Reserve policy [1][2] - The recent rebound in yields suggests increased caution about inflation and potential policy tightening [2] Industrial Sector Performance - Stable long-term interest rates are beneficial for industrial companies, allowing for better management of large projects and capital expenditures [3][4] - The S&P 500 Industrials Select Sector SPDR (XLI) has increased by 15.3% year-to-date as of November 19, indicating strong sector performance [4] Investment Opportunities - Companies highlighted for their strong performance in the current environment include Kaiser Aluminum Corporation (KALU), ScanSource, Inc. (SCSC), and Alarm.com Holdings, Inc. (ALRM) [3][9] - KALU has an expected earnings growth rate of 133.9%, with a Zacks Consensus Estimate increase of 26.5% over the past 60 days [7] - SCSC's expected earnings growth rate is 15.7%, with a 4% increase in earnings estimates over the past 60 days [8] - ALRM has an expected earnings growth rate of 9.7%, with a 5.5% increase in earnings estimates over the past 60 days [9][10]

Core Insights - Climb Channel Solutions has announced a strategic partnership with Liongard to enhance managed service providers' (MSPs) capabilities in managing and securing IT environments [1][2]. Group 1: Partnership Objectives - The collaboration aims to provide MSPs with advanced tools for better management and security of IT infrastructures, leveraging Liongard's asset intelligence platform for deeper insights [2]. - Automation features from Liongard will streamline routine tasks for MSPs, allowing them to focus on delivering strategic value to clients [2][4]. Group 2: Company Statements - Chessie Huber from Liongard emphasized that the partnership aligns with their mission to empower the ecosystem by equipping providers with necessary asset intelligence [3]. - Dale Foster, CEO of Climb, expressed excitement about the partnership, highlighting its potential to offer resellers unparalleled visibility and control over IT environments [5]. Group 3: Company Background - Climb Channel Solutions is a global specialty technology distributor focusing on various IT sectors, including Security, Data Management, and Cloud solutions [7]. - Liongard is recognized for its AI-powered platform that provides unified, real-time visibility across IT environments, helping organizations reduce risks and enhance operational efficiency [8][9].

Core Insights - ScanSource (SCSC) missed Wall Street's revenue expectations for Q3 CY2025, reporting sales of $739.7 million, a 4.6% decline year on year, and a 6.1% miss against analyst estimates of $787.4 million [1][4] - The company's full-year revenue guidance of $3.2 billion at the midpoint exceeded analysts' estimates by 0.6% [1] - Non-GAAP profit per share was reported at $1.06, which was 14% above analysts' consensus estimates of $0.93 [1][4] Revenue Performance - Q3 revenue was $739.7 million, down 4.6% year on year, and missed analyst expectations by 6.1% [4] - Adjusted EBITDA was $38.59 million, beating analyst estimates of $35.03 million, with a margin of 5.2% [4] - The company reaffirmed its full-year revenue guidance of $3.2 billion and EBITDA guidance of $155 million, which is above analyst estimates of $150.8 million [4] Management Commentary - Management attributed the revenue decline to ongoing weakness in Brazil and changes in revenue reporting, particularly in the Specialty Technology Solutions segment [3] - CEO Mike Baur noted growth in some technology categories in North America but acknowledged declines in certain legacy areas [3] - The company is focusing on profitable growth through acquisitions and a shift towards higher-margin, recurring revenue businesses [3] Strategic Outlook - Management emphasized the importance of strategic M&A and channel programs for emerging tech suppliers [3] - Investments in AI education, channel expansion, and acquisition integration are seen as key drivers for future growth [3] - CFO Steve Jones highlighted potential variability in quarterly performance due to the timing of large deals and the evolving revenue mix [3]