ScanSource(US:SCSC)2022-05-13 17:35Financial Data and Key Metrics Changes - The company reported a 16% year-over-year increase in net sales for Q3, reaching $846 million, and a record non-GAAP EPS of $4.01 for the trailing 12-month period [8][20][21] - Adjusted EBITDA for Q3 totaled $44.1 million, reflecting a 38% year-over-year increase, with an adjusted EBITDA margin of 5.21% [20][23] - Gross profit grew 21% year-over-year to $107 million, with margins increasing to 12.6% from 12.1% in the prior year [21][22] Business Line Data and Key Metrics Changes - Specialty Technology Solutions segment net sales increased by 15% year-over-year, driven by strong demand for hardware technologies and a favorable sales mix [16] - Modern Communications & Cloud segment net sales rose 17% year-over-year, with recurring revenue in Cloud and Connectivity increasing by 18% [17] Market Data and Key Metrics Changes - The company experienced strong demand across its technologies, with significant contributions from large deals and improved product availability [12][21] - Brazil showed double-digit growth, indicating a strong market presence and execution in that region [17][39] Company Strategy and Development Direction - The company is focused on its hybrid distribution strategy, which has proven successful in driving growth and profitability [8][9] - The strategy emphasizes connecting devices to the cloud and enabling partners to meet end-user requirements, reducing complexity in the buying process [36] Management's Comments on Operating Environment and Future Outlook - Management noted that demand remains strong despite ongoing supply chain challenges, with no indications of a slowdown from customers [32][34] - The company raised its fiscal year 2022 outlook, expecting at least 10% net sales growth and adjusted EBITDA of at least $165 million [8][25] Other Important Information - The company generated $30 million in operating cash for the quarter and maintained a strong balance sheet with a net debt leverage of approximately 0.8 times trailing 12 months adjusted EBITDA [24][25] - Share repurchases totaled approximately $8.3 million during the quarter under a $100 million authorization [25] Q&A Session Summary Question: What was the pull forward number in Q3 from Q4? - The pull forward number was about $30 million due to late inventory availability [30] Question: Were there any impacts from supply chain disruptions? - The supply chain environment remains challenging, but the company was able to meet customer demands with late inventory arrivals [32] Question: Is there any indication of slowing demand in the marketplace? - Management indicated that demand is still strong, driven by trends in digital transformation and automation [34] Question: How is the acceptance of the hybrid model among customers? - The hybrid distribution model is gaining acceptance, providing partners with choice and reducing complexity in the buying process [36] Question: What is the competitive landscape like? - The company has a strong portfolio of suppliers and a growing partner base, positioning it competitively in the market [38] Question: Can you comment on capital allocation and share repurchases? - The focus remains on growth and maintaining a strong balance sheet, with share repurchases being a secondary priority [42]