What changed in this filing

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Item 1. Business

2023-08-22 compared with 2022-08-23 · 69 added, 65 removed, 196 unchanged (41% of the section changed)

ScanSource, Inc.

(together with its subsidiaries referred to as the "Company” or “ScanSource” or “we”) is a leading hybrid distributor connecting devices to the cloud and accelerating growth for partners across hardware, Software as a Service ("SaaS"), connectivity and cloud.

ScanSource enables partners to deliver solutions for their customers to address changing end-user buying and consumption patterns.

(together with its subsidiaries referred to as the "Company” or “ScanSource” or “we”) is a leading hybrid distributor connecting devices to the cloud and accelerating growth for customers across hardware, Software as a Service ("SaaS"), connectivity and cloud.

ScanSource enables customers to deliver solutions for their end users to address changing buying and consumption patterns.

ScanSource sells through multiple, specialized routes-to-market with hardware, SaaS, connectivity and cloud service offerings from the world's leading technology suppliers.

We provide technology solutions and services from more than 500 leading suppliers of mobility, barcode, point-of-sale ("POS"), payments, physical security, networking, unified communications, collaboration (UCaaS, CCaaS), connectivity and cloud services.

ScanSource was incorporated in South Carolina in 1992 and serves approximately 30,000 sales partners.

ScanSource was incorporated in South Carolina in 1992 and serves approximately 30,000 customers.

Net sales for fiscal year ended June 30, 2023 totaled $3.79 billion .

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Our customers are businesses of all sizes that sell to end-customers across many industries.

Our customer channels include value-added resellers (“VARs”), sales partners or agents, independent sales organizations (“ISOs”) and independent software vendors (“ISVs”).

Our customer channels include value-added resellers (“VARs”), customers or agents, independent sales organizations (“ISOs”) and independent software vendors (“ISVs”).

These customer channels provide us with multiple routes-to-market.

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Management determined that the Company did not have sufficient scale in these markets to maximize our value-added model for physical product distribution, leading us to focus and invest in our higher margin businesses.

The Divestitures were reported as discontinued operations within this Form 10-K.

The Divestitures are reported as discontinued operations within this Form 10-K.

Unless otherwise indicated, descriptions of our business and amounts reported in this Form 10-K pertain to continuing operations only.

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Our goal is to provide exceptional experiences for our partners, suppliers, and people, and we strive for operational excellence.

Our hybrid distribution strategy relies on a channel sales model to offer hardware, SaaS, connectivity and cloud services from leading technology suppliers to sales partners that solve end-customers’ challenges.

ScanSource enables sales partners to deliver solutions for their customers to address changing end-customer buying and consumption patterns.

Our solutions may include a combination of offerings from multiple suppliers or give our sales partners access to additional services.

As a trusted adviser to our sales partners, we provide customized solutions through our strong understanding of end-customer needs.

Our hybrid distribution strategy relies on a channel sales model to offer hardware, SaaS, connectivity and cloud services from leading technology suppliers to customers that solve end users’ challenges.

ScanSource enables customers to deliver solutions for their end users to address changing buying and consumption patterns.

Our solutions may include a combination of offerings from multiple suppliers or give our customers access to additional services.

As a trusted adviser to our customers, we provide customized solutions through our strong understanding of end user needs.

Value Proposition

Our customer channels and supplier relationships serve as competitive advantages.

From our pivotal position at the intersection of technology distribution trends, we provide robust value to both our sales partners and our suppliers.

We make it easier for our sales partners and suppliers to deliver leading technology solutions that drive business outcomes for end-customers.

From our pivotal position at the intersection of technology distribution trends, we provide robust value to both our customers and our suppliers.

We make it easier for our sales partners and suppliers to deliver leading technology solutions that drive business outcomes for end users.

Value proposition for our customers/sales partners:

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• Provide custom configuration, services, platforms and digital tools

• Offer innovative financial solutions for our sales partners

• Offer innovative financial solutions for our customers

Index to Financial Statements

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Specialty Technology Solutions Segment

The Specialty Technology Solutions portfolio includes enterprise mobile computing, data capture, barcode printing, POS, payments, networking, electronic physical security, cyber security and other technologies.

There are adjacencies among these technologies to develop and deliver solutions for our customers.

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Modern Communications & Cloud Segment

The Modern Communications & Cloud portfolio of solutions includes communications technologies and services for voice, video conferencing, wireless, data networking, cyber security, cable, unified communications and collaboration, cloud and technology services.

The Modern Communications & Cloud portfolio of solutions includes communications technologies and services for voice, video conferencing, wireless, data networking, cybersecurity, cable, unified communications and collaboration, cloud and technology services.

As these solutions come together on IP networks, new opportunities are created to move into adjacent solutions for all vertical markets, such as education, healthcare and government.

This segment includes recurring revenue from our Intelisys and intY businesses.

Our customers, or sales partners, are businesses of all sizes that sell to end-customers across industries ranging from manufacturing, warehouse and distribution, retail and e-commerce, hospitality, transportation and logistics, government, education and healthcare, among others.

Our customers, or sales partners, are businesses of all sizes that sell to end users across industries ranging from manufacturing, warehouse and distribution, retail and e-commerce, hospitality, transportation and logistics, government, education and healthcare, among others.

Our customers provide us with multiple, specialized routes-to-market through various channels, including:

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Specialty technology VARs focus on one or more technologies, providing specialized knowledge and expertise for technology solutions, such as tailored software or integrated hardware.

Direct marketers provide a very broad range of technology brands to business, government, education and healthcare

Direct marketers provide a very broad range of technology brands to business, government, education and healthcare markets.

IT system integrators and network integrators develop computer and networking solutions for end-customers’ IT

Index to Financial Statements

IT system integrators and network integrators develop computer and networking solutions for end-customers’ IT needs.

Service providers, managed service providers and cloud service providers deliver advanced multi-discipline services with customized solutions that bundle data, collaboration, cloud, network and digital telecommunication services for end-customers' needs.

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They generally focus on cloud solutions and sell or certify bundled hardware, software and service solutions.

We provide products and services from approximately 500 suppliers, including 8x8, AT&T, Aruba/HPE, Avaya, Axis, Cisco, Comcast Business, Datalogic, Dell, Elo, Epson, Equinix, Extreme, F5, Five9, Fortinet, Genesys, Granite, GTT, Hanwha, Honeywell, Ingenico, Jabra, Lumen, Microsoft, MetTel, Mitel, NCR, NICE CXone, Poly, RingCentral, Spectrum, Toshiba Global Commerce Solutions, Trend Micro, Ubiquiti, Verifone, Verizon, VMWare, Windstream, Zebra Technologies and Zoom.

We provide products and services from approximately 500 suppliers, including 8x8, AT&T, Aruba/HPE, Avaya, Axis, Cisco, Comcast Business, Datalogic, Dell, Elo, Epson, Equinix, Extreme, F5, Five9, Fortinet, Genesys, Granite, GTT, Hanwha, Honeywell, Ingenico, Jabra, Logitech, Lumen, Microsoft, MetTel, Mitel, NCR, NICE CXone, Poly HP, RingCentral, Spectrum, Toshiba Global Commerce Solutions, Trend Micro, Ubiquiti, Verifone, Verizon, VMWare, Windstream, Zebra Technologies and Zoom.

We provide products and services from many of our key suppliers in all of our geographic markets;

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See "Risk Factors" for a discussion of the risks related to our foreign operations.

We also have drop-shipment arrangements with some of our suppliers, which allow us to offer products to customers without taking physical delivery at our facilities.

These drop-shipment arrangements represent approximately 20% of fiscal year 2022 net sales.

Our offerings to our customers include hardware, software, services and connectivity across premise, hybrid and cloud environments.

We believe that sales partners want to offer end-customers complete technology solutions that solve end-user challenges and deliver positive outcomes.

We believe that customers want to offer end users complete technology solutions that solve end-user challenges and deliver positive outcomes.

We align our people, processes and tools to help our sales partners grow by providing more hybrid solutions through a better understanding of end-customer needs.

We are able to provide a combination of offerings from multiple suppliers or give our sales partners access to additional services, including configuration, key injection, integration support and others to deliver solutions.

We provide our sales partners and suppliers with an array of pre-sale business tools and value-added services, including market and technology solution expertise, education and training, product configuration tools, technical support, logistics and channel financial services.

These services allow our sales partners to gain knowledge and experience on marketing, negotiation and selling, to improve customer service, to profitably grow their business and be more cost effective.

We provide our customers and suppliers with an array of pre-sale business tools and value-added services, including market and technology solution expertise, education and training, product configuration tools, technical support, logistics and channel financial services.

These services allow our customers to gain knowledge and experience on marketing, negotiation and selling, to improve customer service, to profitably grow their business and be more cost effective.

Our business is enhanced by our ability and willingness to provide the extra level of services that keeps both our sales partners and suppliers satisfied.

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POS solutions include computer-based terminals, tablets, monitors, payment processing solutions, receipt printers, pole displays, cash drawers, keyboards, peripheral equipment and fully integrated processing units.

Index to Financial Statements

These solutions may include self-service checkout, kiosks and products that attach to the POS network in the store, including network access points, routers and digital signage.

Index to Financial Statements

We offer payment terminals, comprehensive key injection services, reseller partner branding, extensive key libraries, ability to provide point-to-point encryption, and redundant key injection facilities.

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In addition, we partner with ISVs to deliver to merchants integrated tablet POS solution hardware that a merchant may purchase outright or “as a service,” and which includes merchant hardware support and next-day replacement of tablets, terminals and peripherals.

• Physical Security :

• Physical Security and Networking :

We provide electronic physical security solutions that include identification, access control, video surveillance and intrusion-related products.

Our networking products include wireless and networking infrastructure products.

Physical security products are used every day across every vertical market to protect lives, property and information.

These technology solutions require specialized knowledge to deploy effectively, and we offer in-depth training and education to our sales partners to enable them to maintain the appropriate skill levels.

Our networking products include wireless and networking infrastructure products.

• Communications and Collaboration :

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People and Culture

As a people-first organization, respecting and protecting our people and our partners are our top priorities.

From ensuring and supporting an inclusive and diverse workforce and partner base;

providing a safe, healthy work environment;

and working with suppliers and partners that share this commitment, we are dedicated to doing what is right for our employees, channel partners and end customers.

Our real competitive advantage is our people, working together to help our customers and partners grow their businesses.

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In a changing environment, ScanSource is investing in new infrastructure, tools and programs to ensure a "productivity anywhere" outcome, in the new hybrid working world.

In 2022, the Company was named, once again, one of the Best Places to Work in South Carolina.

In 2023, the Company was named one of the Best Places to Work in South Carolina for the eighth consecutive year.

As of June 30, 2023, we have approximately 2,300 employees, of which approximately 1,500 are in the United States and 800 are located internationally in Canada, Brazil and the UK.

We have no organized labor or trade unions in the United States.

As of June 30, 2022 we have 12 office locations in the U.S., eight office locations outside of the U.S., and have a remote employee presence.

During fiscal year 2022, we added 175 new employees.

Diversity and Inclusion

Respecting and protecting our people and our partners are our highest priorities, from ensuring and supporting an inclusive and diverse workforce and partner base;

providing a safe, healthy work environment;

and working with suppliers and partners that share this commitment, we do what is right for our employees, channel partners and end customers.

One of our core values is to promote an environment that respects and values the diverse backgrounds, interests and talents of our employees.

In July 2020, we reaffirmed ScanSource’s commitment to diversity and inclusion with the creation of a comprehensive Diversity & Inclusion (D&I) program and the appointment of our first Chief Diversity Officer ("CDO").

Since taking this role, our CDO launched a D&I strategic plan focused on awareness and education, workforce representation, supplier diversity and community relations.

Along with the appointment of the CDO, an internal D&I Advisory Council was created to assist in the implementation of our

Index to Financial Statements

D&I plan and serve as a sounding board for our employees.

Additionally, initiatives including a D&I book and movie club and employee resource groups are allowing interested employees to broaden their knowledge on various topics in this space.

As of June 30, 2023 we have 10 office locations in the U.S.

and three distribution centers, eight office locations outside of the U.S., and have a remote employee presence.

Professional Development

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We enhanced our learning management system, The Hub, to provide a modernized and engaging user experience for our global employees at all levels.

The ScanSource Leadership Institute ("SLI") is another important program that focuses on identifying and helping to develop the next wave of senior leaders for the Company.

The SLI program brings together twelve hand-selected leaders from our global offices for a two-week program of intensive training and development—with organization.

The ScanSource Leadership Institute ("SLI") is another

Index to Financial Statements

important program that focuses on identifying and helping to develop the next wave of senior leaders for the Company.

The SLI program brings together twelve hand-selected leaders from our global offices for a two-week program of intensive training and development.

While this provides a tool for an individual’s education and growth, it also nurtures cross-functional collaboration with colleagues through a unique social capability.

We offer a comprehensive benefits package which includes on average 80% coverage of employee healthcare premiums and several benefits at no cost to our employees, including life insurance, disability insurance and work-life balance resources.

The financial future of our employees is important to us, which is why we have a 401(k) employer match, performance-based bonus program and employee ownership opportunities for a meaningful portion of our employees through equity incentive grants.

We partner with Tuition.io to provide employees access to knowledge and tools to help manage or plan for student loan debt.

We offer a comprehensive benefits package which includes traditional health insurance, as well as telemedicine alternatives, life insurance, disability insurance and work-life balance resources.

The financial future of our employees is important to us, which is why we have a 401(k) program with a market-competitive employer match, performance-based bonus program and employee ownership opportunities for a meaningful portion of our employees through our Employee Stock Purchase Plan, as well as our equity incentive grants.

We partner with Fidelity to provide employees access to knowledge and tools to help manage or plan for student loan debt.

To expand our financial wellness offerings, we offer workshops and webinars focused on student debt and general debt-counselling services.

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That’s why we offer dedicated resources to help foster a work/life balance.

At the onset of the COVID-19 pandemic, we swiftly and successfully implemented a work-from-home policy for all employees across geographies, outside of our distribution centers.

We have continued this policy and are pleased with how our employees have adjusted to this new way of doing business, maintaining an extremely high level of productivity and performance.

We have implemented a work-from-home policy for all employees across geographies, outside of our distribution centers.

We are pleased with how our employees have adjusted to this new way of doing business, maintaining an extremely high level of productivity and performance.

With a largely remote workforce, it is critical that we continue to focus on our employees’ health.

We continue to build our 360you program, which provides employees with extensive education and training/coaching opportunities, wellness and fitness challenges, screenings and other valuable resources.

We continue to build our 360you program, which provides employees with extensive education and training/coaching opportunities, wellness and fitness challenges, and other valuable resources.

Diversity and Inclusion

One of our core values is to promote an environment that respects and values the diverse backgrounds, interests and talents of our employees.

ScanSource is committed to a diverse and inclusive workplace with our comprehensive Diversity & Inclusion (D&I) program, led by our first Chief Diversity Officer ("CDO") and an internal D&I Advisory Council.

The Council is an employee-led group focused on sharing insights, ideas, and opinions from our employee base to assist in the implementation of our DEI plan.

To support our goal of becoming a more inclusive workplace, our DEI strategic plan focuses on awareness and education, workforce representation, partner diversity, and community relations.

Additionally, initiatives including a D&I book and movie club, educational DEI opportunities, and global employee resource groups are allowing interested employees to broaden their knowledge on various topics in this space.

Board Role in People and Culture Management

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Our Board also engages in an active succession planning process.

Digital Workplace

Employee outreach and engagement remain critical to the continued success and growth of ScanSource.

Inclusion, participation, and appreciation are key components in retaining talent, maintaining our culture, and keeping employees engaged.

In support of that, in 2023, we launched a new global digital workplace, The Bridge, as our new corporate intranet.

We are excited to enhance global communication, increase employee recognition, and celebrate milestones through this engaging new platform.

Employee Feedback

Index to Financial Statements

We foster opportunities for employee engagement and have multiple avenues for communication, which allows all full-time employees to anonymously give us feedback on our workplace culture, employee programs, and more.

We also implement employee engagement surveys globally to gather feedback and build the best environment possible for our employees.

We believe we are a leader in the specialty markets we serve.

The market for technology products and solutions is highly competitive, both in the United States and internationally.

Competitive factors include price, product availability, speed and

Index to Financial Statements

accuracy of delivery, effectiveness of sales and marketing programs, credit availability, ability to tailor specific solutions to customer needs, quality and breadth of product lines and services and availability of technical and product information.

Our competitors include local, regional, national and international distributors, as well as suppliers that sell directly to resellers and to end-customers.

In addition, our competitors include resellers that sell to franchisees, third-party dealers and end-customers.

Competitive factors include price, product availability, speed and accuracy of delivery, effectiveness of sales and marketing programs, credit availability, ability to tailor specific solutions to customer needs, quality and breadth of product lines and services and availability of technical and product information.

Our competitors include local, regional, national and international distributors, as well as suppliers that sell directly to resellers and to end users.

In addition, our competitors include resellers that sell to franchisees, third-party dealers and end users.

Competition has increased over the last several years as broad line and other value-added distributors have entered into the specialty technology markets.

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In our Specialty Technology Solutions segment, we compete with broad-line distributors, such as Ingram Micro and TD Synnex, in most geographic areas, and more specialized security distributors, such as ADI and Wesco.

Additionally, we also compete against other smaller, more specialized AIDC and POS distributors, such as BlueStar.

We also compete against other smaller, more specialized AIDC and POS distributors, such as BlueStar.

In our Modern Communications & Cloud segment, we compete against broad-line distributors, such as Ingram Micro and TD Synnex, and more specialized distributors, such as Jenne.

Additionally, for Intelisys' technology services, we also compete against other smaller, technology services distributors, such as Avant and Telarus.

Additionally, for Intelisys' technology services, we compete against other smaller, technology services distributors, such as Avant and Telarus.

For our intY business, we compete against other developers of cloud software and services platforms, such as CloudBlue and Pax8.

As we seek to expand our business into other areas closely related to our offerings, we may encounter increased competition from current competitors and/or from new competitors, some of which may be our current sales partners.

Our sales organization consists of inside and field sales representatives located in the United States, Canada, the UK and Brazil.

The majority of our sales partners are assigned to a dedicated sales representative or team whose main focus is developing customer relationships and providing our sales partners with solutions to meet their end-customer’s needs.

Our sales teams are advocates for and trusted advisers to our sales partners.

Sales teams are responsible for developing technical expertise within broad product markets, recruiting sales partners, creating demand, negotiating pricing and reviewing overall product and service requirements of our sales partners.

The majority of our sales partners are assigned to a dedicated sales representative or team whose main focus is developing customer relationships and providing our customers with solutions to meet their end-customer’s needs.

Our sales teams are advocates for and trusted advisers to our customers.

Our sales representatives receive comprehensive training with respect to the technical characteristics of suppliers’ products, supplemented by frequent product and service seminars conducted by supplier representatives and bi-weekly meetings among product, marketing and sales managers.

Our sales teams also provide sales partners with online ordering, API, EDI and other information systems, allowing sales partners to easily gain access to product specifications, availability and customized pricing, as well as the ability to place and follow the status of orders.

Our sales teams also provide customers with online ordering, API, EDI and other information systems, allowing customers to easily gain access to product specifications, availability and customized pricing, as well as the ability to place and follow the status of orders.

We market our technology solutions and services through a range of digital and print channels, including online product catalogs customized for our North American and Brazilian markets;

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email direct marketing, among others.

Our marketing practices are tailored to fit the specific needs of our sales partners and suppliers - ensuring we help our partners create, deliver and manage solutions for end-customers across our vertical markets.

Our marketing practices are tailored to fit the specific needs of our customers and suppliers - ensuring we help our partners create, deliver and manage solutions for end users across our vertical markets.

Our comprehensive marketing efforts include sales promotions, advertisements, management of sales leads, trade show design and event management, advertorials, content creation, partner events and training and certification courses with leading suppliers in an effort to recruit prospective sales partners.

Information Technology Systems

Index to Financial Statements

Our information systems are scalable and capable of supporting numerous operational functions including purchasing, receiving, order processing, shipping, inventory management and accounting.

Our sales partners and employees rely on our information systems for online, real-time information on pricing, inventory availability and reservation and order status.

Our customers and employees rely on our information systems for online, real-time information on pricing, inventory availability and reservation and order status.

Our warehouse operations use bar code technology for receiving and shipping and automated systems for freight processing and shipment tracking, each of which is integrated with our multiple information systems.

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To ensure that adequate inventory levels are maintained, our buyers depend on the system’s purchasing and receiving functions to track inventory on a perpetual basis.

Index to Financial Statements

Warehouse and Shipping Strategy

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Financial Services

Our sales terms include trade credit, various third-party financing options, which include leasing, flooring and other secured financing for qualified sales partners.

Our sales terms include trade credit, various third-party financing options, which include leasing, flooring and other secured financing for qualified customers.

These sales terms allow us to compete within our specific geographic areas to facilitate our growth plans.

We believe these options reduce the sales partner’s need to establish multiple credit relationships.

We believe these options reduce the customer’s need to establish multiple credit relationships.

Trade and Service Marks

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business