ScanSource (NasdaqGS:SCSC) Conference December 09, 2025 01:40 PM ET Company ParticipantsMike Baur - Chairman and CEOAdam Tindle - Managing DirectorAdam TindleAll right. Thanks everybody for joining. Hopefully you are well-fed and happy after lunch. My name is Adam Tindle, and this is part of my supply chain coverage here at Raymond James. Very happy to have the team here from ScanSource. Mike and I are going to do a fireside chat. Mike Baur, Chairman and CEO of ScanSource, and of course, Mary Gentry, here a ...

Arrow Electronics (NYSE:ARW) 2025 Conference December 02, 2025 10:55 AM ET Company ParticipantsBill Austen - Interim President and CEOBill AustenHello everyone, and thank you for joining us today. I'm Bill Austen, Interim President and CEO of Arrow Electronics, and it's a privilege to speak with you today. Thank you for taking the time to be with us and for your interest in Arrow. I've served on Arrow's board since 2020, and I'm honored to lead the company during this transition period.I, along with the ful ...

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]

Financial Data and Key Metrics Changes - For Q1 2026, the company reported a 6% increase in gross profits and a 26% year-over-year growth in non-GAAP EPS [9] - Adjusted EBITDA margins were at 5.2%, with cash conversion of non-GAAP net income at 88% [9] - The company ended Q1 with approximately $125 million in cash and a net debt leverage ratio close to zero [10] Business Line Data and Key Metrics Changes - In the specialty technology solutions segment, net sales declined by 5% year-over-year and 9% quarter-over-quarter, influenced by approximately $40 million of large deal pull-ins in Q4 [9] - The Intellisys and advisory segment saw a 4% increase in net sales year-over-year, with annualized net billings reaching approximately $2.78 billion [10] Market Data and Key Metrics Changes - The percentage of gross profits from recurring revenues in the specialty technology solutions segment was approximately 13% [10] - The company maintained its market share despite the decline in net sales, indicating stability in its competitive position [10] Company Strategy and Development Direction - The company is focusing on helping channel partners transition from traditional VAR to solution providers and technology architects, emphasizing the importance of integrated converged solutions [4][5] - Recent acquisitions, including DataZoom, are expected to enhance the company's capabilities in mobile data connectivity and support its strategic goals [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future growth of technology distribution, driven by the convergence of hardware, software, and services [4] - The company reaffirmed its full-year outlook, expecting net sales growth between $3.1 billion and $3.3 billion, with adjusted EBITDA ranging from $150 million to $160 million [12] Other Important Information - The company is actively pursuing acquisitions to expand its capabilities and drive additional value across its partner ecosystem [11] - The management highlighted the importance of gross profit growth as a key performance indicator moving forward [16] Q&A Session Summary Question: Concerns about top-line revenue decline - Management clarified that they prioritize profitable growth and do not believe they are losing market share, attributing revenue challenges to timing and deal structuring rather than demand weakness [14][17] Question: Sustainability of supplier rebates - Management indicated that supplier programs have evolved and are tied more to activities rather than inventory, suggesting sustainability in the rebates received [18] Question: Insights on DataZoom acquisition - The acquisition is expected to be margin accretive and enhance the company's ability to sell more mobile devices by integrating connectivity solutions [20][21] Question: Guidance on net sales growth - Management reaffirmed confidence in their guidance, citing that Q1 results were in line with expectations and that large deals are merely delayed rather than canceled [36][40] Question: Business development investments in Intellisys - Management reported double-digit new order growth year-over-year, indicating that investments are translating into pipeline activity [49]

Financial Data and Key Metrics Changes - For Q1 2026, the company reported a 6% increase in gross profits and a 26% year-over-year growth in non-GAAP EPS [10] - Adjusted EBITDA margins were at 5.2%, with a cash conversion of non-GAAP net income at 88% [10] - The company ended Q1 with approximately $125 million in cash and a net debt leverage ratio of approximately zero [13] Business Line Data and Key Metrics Changes - In the Specialty Technology Solutions segment, net sales declined by 5% year-over-year and 9% quarter-over-quarter, with gross profits increasing by 7% year-over-year [11] - The Intellisys and Advisory segment saw a 4% increase in net sales year-over-year, with annualized net billings reaching approximately $2.78 billion [12] Market Data and Key Metrics Changes - The company believes it maintained market share despite the decline in revenue, attributing the challenges to timing issues with larger deals rather than loss of market share [21][22] - The company is focusing on the indirect channel to deliver recurring, complex, and high-value solutions as technology markets converge [5] Company Strategy and Development Direction - The company is investing in its Intelisys and Advisory segment to accelerate new order growth, including expanding its solutions engineering team [6] - The recent acquisition of DataZoom is expected to enhance the company's capabilities in mobile data connectivity and support its strategic plan [13][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming the full-year net sales growth outlook, expecting revenue growth to accelerate in the second half of the fiscal year [14][45] - The company emphasized that the decline in revenue is not indicative of overall demand weakness but rather a timing issue with large deals [45] Other Important Information - The company is actively pursuing acquisition targets to expand capabilities and drive additional value across its partner ecosystem [13] - The company plans to maintain a target net debt leverage ratio of one to two times adjusted EBITDA while balancing acquisitions and share repurchases [14] Q&A Session Summary Question: Concerns about revenue decline and market share - Management clarified that they prioritize profitable growth and do not believe they are losing market share, attributing revenue challenges to timing and deal structuring [20][21] Question: Sustainability of supplier rebates - Management indicated that supplier programs have evolved and are tied to activities rather than inventory, suggesting sustainability in the rebates [23][24] Question: Details on the DataZoom acquisition - Management described DataZoom as a tuck-in acquisition that will be margin accretive and enhance mobile device sales through improved connectivity solutions [27][28] Question: Guidance on net sales growth - Management reaffirmed guidance based on internal plans and noted that Q1 results were in line with expectations, indicating confidence in future performance [44][45] Question: Business development investments in Intelisys - Management reported double-digit new order growth year-over-year, indicating that investments are translating into pipeline activity [57]

Core Insights - D&H Canada has entered into a new partnership with Dell, becoming an authorized distributor of Dell's endpoint solutions and PowerEdge servers, reflecting significant growth and partner demand for Dell's offerings [1][2][3] Company Overview - D&H Canada provides technology solutions to various markets, including corporate, SMB, mid-market, enterprise, and government, focusing on endpoints and advanced technologies [5] - The company emphasizes a "Built for Growth" mindset, offering customized services and comprehensive enablement resources to help partners capitalize on market opportunities [5] Partnership Details - The partnership with Dell allows D&H Canada to offer a range of professional-grade products, including Pro and Pro Max laptops, Chrome laptops, and PowerEdge servers, aimed at enhancing performance and productivity for end-users [2][3] - D&H Canada plans to launch a formal storage practice with Dell in the near future, further expanding its service offerings [3] Market Impact - The collaboration is expected to enhance opportunities for D&H Canada's partners, providing them with access to Dell's innovative solutions and professional services, which are designed to support business transformation [2][4] - D&H Canada's growth in market share across Canada is highlighted as a key factor in the partnership, indicating a strong position in the VAR and MSP categories [3]

Financial Data and Key Metrics Changes - The company reported revenues of $12.6 billion for Q3 2025, representing a year-over-year increase of 7.2% and exceeding the high end of guidance [4][15] - Non-GAAP diluted earnings per share (EPS) was $0.72, at the high end of guidance, despite a minor impact from a ransomware incident [4][21] - Gross profit for Q3 was $870 million, up from $845 million year-over-year, with gross margins showing a sequential improvement of 34 basis points [19][21] - Adjusted EBITDA for the quarter was $342 million, reflecting a 3% increase in U.S. dollars [21] Business Line Data and Key Metrics Changes - Client and endpoint solutions grew nearly 13% on an FX-neutral basis, driven by strong demand for notebooks and desktops [15][17] - Advanced solutions sales decreased by 4.5% year-over-year, with growth in servers and storage offset by weaker results in virtualization and infrastructure software [15][19] - Cloud revenues saw a 4% decline; however, excluding a non-core divestiture, cloud net revenues were up low single digits year-over-year [16][19] Market Data and Key Metrics Changes - Geographically, Latin America and Asia-Pacific regions experienced robust FX-neutral growth in the low teens year-over-year, while North America grew just over 3% [17] - EMEA showed slight growth on an FX-neutral basis, reflecting a generally softer macro environment in parts of Europe [17] Company Strategy and Development Direction - The company is focused on scaling its Xvantage digital platform and enhancing its AI ecosystem, positioning itself at the center of the $5 trillion global technology landscape [6][7] - The Enable AI program has engaged thousands of customers, providing tools for assessing and deploying AI solutions [10][21] - The company aims to support enterprise customers in their AI transformation journey, leveraging its proprietary AI innovation [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fourth quarter, expecting continued year-over-year net sales growth and a solid guidance range for revenues [24][54] - The impact of the ransomware incident was estimated to be within 1% to 1.5% of net sales, with a minimal effect on overall operations [14][21] - The company remains optimistic about the SMB segment, which has shown growth over the past three quarters [46][51] Other Important Information - The company returned $18.3 million to stockholders through dividends and announced a 2.6% increase in the quarterly dividend for Q4 [23] - The balance sheet showed net working capital of $4.9 billion, an increase from $4.3 billion year-over-year, driven by higher net sales [22] Q&A Session Summary Question: How should margins be expected to trend going forward? - Management indicated that guidance implies margins in the high 6s, with continued strength in SMB contributing positively [27][28] Question: How should inventory and free cash flow be viewed going forward? - Management noted a sequential decline in inventory and anticipated a solid cash flow quarter in Q4, similar to previous years [32][33] Question: Where is Xvantage seeing the most benefit? - Xvantage is benefiting across both SMB and enterprise segments, with SMB leveraging it for comprehensive business management [40][41] Question: What is the outlook for the PC refresh cycle? - The company is in the later stages of the PC refresh cycle, with potential for AI-powered PCs to extend this cycle [43] Question: What are the expectations for a budget flush exiting 2025? - Management noted a typical seasonal increase in revenues due to budgeting cycles, with a positive outlook for SMB spending [46]

Financial Performance - Q3 2025 - Net sales reached $126 billion, a 72% year-over-year increase[10] - Gross profit amounted to $870 million, up 29% compared to the previous year[10] - Non-GAAP net income was $169 million, representing a 60% increase year-over-year[10] - Adjusted EBITDA totaled $342 million, a 32% increase from the prior year[10] - Non-GAAP diluted EPS stood at $072, exceeding the guidance midpoint by $005[10] Financial Performance - YTD 2025 - Net sales reached $377 billion, an 88% increase year-over-year[13] - Gross profit was $25 billion, up 11% compared to the same period last year[13] - Non-GAAP net income amounted to $455 million, a 98% increase year-over-year[13] - Adjusted EBITDA totaled $927 million, a 29% increase from the prior year[13] - Non-GAAP diluted EPS stood at $194, up 37% year-over-year[13] Q4 2025 Guidance - The company projects net sales between $14 billion and $1435 billion, indicating year-over-year growth of 49% to 75%[35] - Gross profit is expected to range from $935 million to $990 million[35] - Non-GAAP EPS is projected to be between $085 and $095[35]