What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-05-07 · 213 added, 213 removed, 442 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except share information)

March 31, 2024 June 30, 2023

September 30, 2024 June 30, 2024

Current assets:

Cash and cash equivalents $ 145,044 $ 185,460

Accounts receivable, less allowance of $ 19,566 at March 31, 2024

Accounts receivable, less allowance of $ 22,721 at September 30, 2024

and $ 20,684 at June 30, 2024

13 unchanged sentences

Accrued expenses and other current liabilities 69,326 65,616

Current portion of contingent consideration 1,911 —

Income taxes payable 6,376 7,895

1 unchanged sentence

Total current liabilities 666,006 669,352

Deferred income taxes — 3,816

Long-term debt, net of current portion 133,913 136,149

Borrowings under revolving credit facility — 50

Long-term portion of contingent consideration 15,289 —

Other long-term liabilities 50,408 49,226

5 unchanged sentences

Common stock, no par value;

45,000,000 shares authorized, 24,708,808 and 24,844,203 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively

46,426 58,241

45,000,000 shares authorized, 24,005,107 and 24,243,848 shares issued and outstanding at September 30, 2024 and June 30, 2024, respectively

Retained earnings 1,030,712 1,013,738

8 unchanged sentences

(In thousands, except per share data)

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

Quarter ended

September 30,

Net sales $ 775,580 $ 876,305

8 unchanged sentences

Interest income ( 2,659 ) ( 1,325 )

Gain on sale of business — — ( 14,533 ) —

Other expense, net 241 361 991 1,314

Other (income) expense, net ( 4,782 ) 677

Income before income taxes 22,962 19,147

11 unchanged sentences

(In thousands)

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

Quarter ended

September 30,

Net income $ 16,974 $ 15,432

Unrealized gain (loss) on hedged transaction, net of tax 148 ( 1,165 ) ( 1,246 ) 718

Realized foreign currency gain on sale of business — — 3,805 —

Unrealized (loss) gain on hedged transaction, net of tax ( 1,050 ) 153

Foreign currency translation adjustment 4,109 ( 6,890 )

11 unchanged sentences

Net income — — 16,974 — 16,974

Unrealized gain on hedged transaction, net of tax — — — 153 153

Foreign currency translation adjustment — — — ( 6,890 ) ( 6,890 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 116,028 ( 1,510 ) — — ( 1,510 )

Share-based compensation — 2,770 — — 2,770

Balance at September 30, 2023 24,960,231 $ 59,501 $ 952,110 $ ( 96,358 ) $ 915,253

Net income — — 32,726 — 32,726

Unrealized loss on hedged transaction, net of tax — — — ( 1,050 ) ( 1,050 )

Foreign currency translation adjustment — — — 4,109 4,109

Realized foreign currency translation gain from disposal of a business — — — 3,805 3,805

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 349,277 2,177 — — 2,177

1 unchanged sentence

Share-based compensation — 2,471 — — 2,471

Balance at December 31, 2023 25,154,469 $ 63,983 $ 984,836 $ ( 95,218 ) $ 953,601

Net income — — 12,806 — 12,806

Unrealized gain on hedged transaction, net of tax — — — 148 148

Foreign currency translation adjustment — — — ( 4,947 ) ( 4,947 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 24,220 180 — — 180

Common stock repurchased ( 469,881 ) ( 20,117 ) — — ( 20,117 )

Share-based compensation — 2,380 — — 2,380

Balance at March 31, 2024 24,708,808 $ 46,426 $ 997,642 $ ( 100,017 ) $ 944,051

Balance at September 30, 2024 24,005,107 $ 2,975 $ 1,030,712 $ ( 112,794 ) $ 920,893

See accompanying notes to these condensed consolidated financial statements.

14 unchanged sentences

Balance at September 30, 2023 24,960,231 $ 59,501 $ 952,110 $ ( 96,358 ) $ 915,253

Net income — — 25,734 — 25,734

Unrealized gain on hedged transaction, net of tax — — — 3 3

Foreign currency translation adjustment — — — 7,401 7,401

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 117,112 ( 1,112 ) — — ( 1,112 )

Share-based compensation — 3,356 — — 3,356

Balance at December 31, 2022 25,343,014 $ 68,313 $ 896,645 $ ( 102,572 ) $ 862,386

Net income — — 21,221 — 21,221

Unrealized loss on hedged transaction, net of tax — — — ( 1,165 ) ( 1,165 )

Foreign currency translation adjustment — — — 4,291 4,291

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 20,851 118 — — 118

Common stock repurchased ( 356,469 ) ( 10,906 ) — — ( 10,906 )

Share-based compensation — 2,950 — — 2,950

Balance at March 31, 2023 25,007,396 $ 60,475 $ 917,866 $ ( 99,446 ) $ 878,895

See accompanying notes to these condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Nine months ended

Three months ended

September 30,

Cash flows from operating activities:

Net income $ 16,974 $ 15,432

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Gain on sale of business ( 14,533 ) —

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 7,471 7,217

12 unchanged sentences

Income taxes payable ( 1,523 ) ( 1,798 )

Net cash provided by (used in) operating activities 316,908 ( 20,508 )

Net cash provided by operating activities 44,830 93,533

Cash flows from investing activities:

Capital expenditures ( 2,375 ) ( 2,315 )

Proceeds from sale of business, net of cash transferred 17,978 —

Net cash provided by (used in) investing activities 10,693 ( 6,549 )

Cash paid for business acquisitions, net of cash acquired ( 56,849 ) —

Net cash used in investing activities ( 59,224 ) ( 2,315 )

Cash flows from financing activities:

1 unchanged sentence

Repayments on revolving credit, net of expenses ( 8,430 ) ( 669,424 )

(Repayments) borrowings on long-term debt, net ( 5,040 ) 16,527

Repayments on long-term debt ( 357 ) ( 938 )

Repayments on finance lease obligation ( 275 ) ( 191 )

Debt issuance costs — ( 1,407 )

Exercise of stock options 6,971 72

1 unchanged sentence

Common stock repurchased ( 28,126 ) —

Net cash (used in) provided by financing activities ( 203,941 ) 25,565

Net cash used in financing activities ( 26,630 ) ( 83,493 )

Effect of exchange rate changes on cash and cash equivalents 608 ( 1,256 )

Increase (decrease) in cash and cash equivalents 122,872 ( 613 )

(Decrease) increase in cash and cash equivalents ( 40,416 ) 6,469

Cash and cash equivalents at beginning of period 185,460 36,178

8 unchanged sentences

(together with its subsidiaries referred to as “the Company” or “ScanSource”) 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.

The Company brings technology solutions and services from the world’s leading suppliers of mobility and barcode, point-of-sale ("POS"), payments, networking, physical security, unified communications and collaboration, telecom and cloud services to market.

The Company brings technology solutions and services from the world’s leading suppliers of mobility a nd barcode, point-of-sale ("POS"), payments, networking, security, unified communications and collaboration, connectivity and cloud services to market.

The Company operates primarily in the United States, Canada and Brazil.

The Company's two operating segments, Specialty Technology Solutions and Modern Communications & Cloud, are based on technology type and are generally related to (i) technology devices and (ii) communication, connectivity and cloud services, respectively.

Some of the offerings of our major suppliers include products that blend technologies and include both technology devices and communication and connectivity and cloud services products.

We assign all of the offerings of those suppliers' products to the same segment based on which technology predominates the offering.

The Company's two operating segments, Specialty Technology Solutions and Intelisys & Advisory, represent the different sales models the Company uses in executing its hybrid distribution growth strategy.

Basis of Presentation

3 unchanged sentences

GAAP for annual financial statements.

The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at March 31, 2024 and June 30, 2023, the results of operations for the quarters and nine months ended March 31, 2024 and 2023, the condensed consolidated statements of comprehensive income for the quarters and nine months ended March 31, 2024 and 2023, the condensed consolidated statements of shareholders' equity for the quarters and nine months ended March 31, 2024 and 2023 and the condensed consolidated statements of cash flows for the nine months ended March 31, 2024 and 2023.

The results of operations for the quarter and nine months ended March 31, 2024 are not necessarily indicative of the results to be expected for a full year.

The unaudited condensed consolidated financial statements included herein contain all adjustments (consisting of normal recurring and non-recurring adjustments) that are, in the opinion of management, necessary to present fairly the financial position at September 30, 2024 and June 30, 2024, the results of operations for the quarters ended September 30, 2024 and 2023, the condensed consolidated statements of comprehensive income for the quarters ended September 30, 2024 and 2023, the condensed consolidated statements of shareholders' equity for the quarters ended September 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the quarters ended September 30, 2024 and 2023.

The results of operations for the quarter ended September 30, 2024 are not necessarily indicative of the results to be expected for a full year.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

Unless otherwise indicated, disclosures provided in the notes to the Company's consolidated financial statements pertain to continuing operations only.

Segment Changes

Effective July 1, 2024, the Company realigned its operating segments to represent the different sales models it uses in executing its hybrid distribution growth strategy.

The two realigned segments are Specialty Technology Solutions and Intelisys & Advisory.

The Specialty Technology Solutions segment combines the Company's former segments, with the exception of the Company's Intelisys business.

The Intelisys & Advisory segment includes the Intelisys and technology advisors businesses, including Channel Exchange (formerly known as intY USA), RPM and Resourcive.

Both segments include recurring revenue.

The Company has reclassified certain prior year amounts in the segment results to conform with the current year presentation.

These reclassifications had no effect on the condensed consolidated financial results.

See Note 10 - Segment Information for descriptions of the Company's segments.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies for the nine months ended March 31, 2024 from the policies described in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

There have been no material changes to the Company’s significant accounting policies for the quarter ended September 30, 2024 from the policies described in the notes to the Company’s consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

For a discussion of the Company’s significant accounting policies, please see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

3 unchanged sentences

Due to the terms of the agreements governing these accounts, the Company generally does not have the right to offset outstanding checks written from these accounts against cash on hand, and the respective institutions are not legally obligated to honor the checks until sufficient funds are transferred to fund the checks.

As a result, checks released but not yet cleared from these accounts in the amount of $ 0.2 million and $ 8.0 million are included in accounts payable on the condensed consolidated balance sheets at March 31, 2024 and June 30, 2023, respectively.

As a result, checks released but not yet cleared from these accounts in the amount of $ 0.3 million and $ 5.9 million are included in accounts payable on the condensed consolidated balance sheets at September 30, 2024 and June 30, 2024, respectively.

Long-lived Assets

The Company presents depreciation expense and intangible amortization expense on the condensed consolidated income statements.

The Company's depreciation expense related to selling, general and administrative costs totaled $ 2.7 million and $ 8.4 million for the quarter and nine months ended March 31, 2024 and $ 2.6 million and $ 8.1 million for the quarter and nine months ended March 31, 2023.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.3 million and $ 0.8 million for the quarter and nine months ended March 31, 2024 and $ 0.3 million and $ 0.7 million for the quarter and nine months ended March 31, 2023.

The Company's depreciation expense related to selling, general and administrative costs totaled $ 2.9 million and $ 2.8 million for the quarters ended September 30, 2024 and September 30, 2023, respectively.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.3 million and $ 0.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively.

The Company's intangible amortization expense reported on the condensed consolidated income statements relates to selling, general and administrative costs, not the cost of selling goods.

Intangible amortization expense totaled $ 3.8 million and $ 12.0 million for the quarter and nine months ended March 31, 2024 and $ 4.2 million and $ 12.6 million for the quarter and nine months ended March 31, 2023.

Intangible amortization expense totaled $ 4.4 million and $ 4.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively.

Recent Accounting Pronouncements

2 unchanged sentences

To the extent the nature, scope, timing or the impact of the incident is not determinable at the time such Form 8-K is required to be filed, additional information about the material aspects of the cybersecurity incident must be filed on a Form 8-K/A within four business days after such additional information becomes available.

These disclosure requirements on Form 8-K were effective beginning December 18, 2023.

For fiscal years ending on or after December 15, 2023, companies must disclose their cybersecurity processes, management's role in cybersecurity governance, and cybersecurity oversight by the Board of Directors on Form 10-K.

Companies must also disclose their cybersecurity processes, management's role in cybersecurity governance, and cybersecurity oversight by the Board of Directors on Form 10-K.

The Company adopted these rules for the fiscal year ended June 30, 2024.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

14 unchanged sentences

Management determines the estimate of the allowance for doubtful accounts receivable by considering a number of factors, including:

(i) historical experience, (ii) aging of the accounts receivable, (iii) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability.

(i) historical experience, (ii) aging of the accounts receivable, (iii) specific information obtained by the Company on

the financial condition and the current creditworthiness of its customers, (iv) the current economic and country-specific environment and (v) reasonable and supportable forecasts about collectability.

Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model.

1 unchanged sentence

Estimates of expected credit losses on trade receivables over the contractual life are recorded at inception and adjusted over the contractual life.

The changes in the allowance for doubtful accounts for the nine months ended March 31, 2024 are set forth in the table below.

The changes in the allowance for doubtful accounts for the three months ended September 30, 2024 are set forth in the table below.

June 30, 2024 Amounts Charged to Expense Write-offs Other (1)

March 31, 2024

September 30, 2024

(in thousands)

Trade accounts and current notes receivable allowance $ 20,684 $ 1,678 $ ( 153 ) $ 512 $ 22,721

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the nine months ended March 31, 2024.

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the three months ended September 30, 2024.

(3) Revenue Recognition

The Company provides technology solutions and services from the leading global suppliers of mobility, barcode, POS, payments, physical security, unified communications, collaboration, telecom and cloud services.

This includes hardware, related accessories and device configuration as well as software licenses, professional services and hardware support programs.

In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model:

In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model in accordance with ASC 606:

(i) identify contracts with customers;

26 unchanged sentences

The following tables represent the Company's disaggregation of revenue:

Quarter ended March 31, 2024

Specialty Technology Solutions Modern Communications & Cloud Total

Quarter ended September 30, 2024

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service

Hardware, software and cloud (excluding Intelisys) $ 483,704 $ 248,029 $ 731,733

Intelisys connectivity and cloud — 20,866 20,866

Products and services $ 740,734 $ 833 $ 741,567

Recurring revenue (a)

11,565 22,448 34,013

Nine months ended March 31, 2024

Specialty Technology Solutions Modern Communications & Cloud Total

(in thousands)

Revenue by product/service:

Hardware, software and cloud (excluding Intelisys) $ 1,513,926 $ 936,946 $ 2,450,872

Intelisys connectivity and cloud — 62,824 62,824

$ 752,299 $ 23,281 $ 775,580

Quarter ended March 31, 2023

Specialty Technology Solutions Modern Communications & Cloud Total

Quarter ended September 30, 2023

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service

Hardware, software and cloud (excluding Intelisys) $ 565,652 $ 299,803 $ 865,455

Intelisys connectivity and cloud — 20,064 20,064

Products and services $ 846,835 $ 839 $ 847,674

Recurring revenue (a)

7,115 21,516 28,631

Nine months ended March 31, 2023

Specialty Technology Solutions Modern Communications & Cloud Total

(in thousands)

Revenue by product/service:

Hardware, software and cloud (excluding Intelisys) $ 1,769,530 $ 1,012,176 $ 2,781,706

Intelisys connectivity and cloud — 58,867 58,867

$ 853,950 $ 22,355 $ 876,305

(a) Recurring revenue represents revenue primarily from agency commissions, SaaS, subscriptions, and hardware rentals.

(4) Earnings Per Share

1 unchanged sentence

Diluted earnings per share are computed by dividing net income by the weighted-average number of common and potential common shares outstanding.

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

Quarter ended

September 30,

(in thousands, except per share data)

5 unchanged sentences

Net income per common share, diluted $ 0.69 $ 0.61

For the quarter and nine months ended March 31, 2024, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 164,093 and 755,797 , respectively.

For the quarter and nine months ended March 31, 2023, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 779,688 and 1,152,714 , respectively.

For the quarters ended September 30, 2024 and 2023, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 109,450 and 854,893 , respectively.

(5) Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax are as follows:

March 31, 2024 June 30, 2023

September 30, 2024 June 30, 2024

(in thousands)

2 unchanged sentences

Accumulated other comprehensive loss $ ( 112,794 ) $ ( 115,853 )

The tax effect of amounts in comprehensive loss reflect a tax expense (benefit) as follows:

Quarter ended March 31, Nine months ended March 31,

2024 2023 2024 2023

The tax effect of amounts in comprehensive loss reflect a tax benefit as follows:

Quarter ended September 30,

(in thousands)

Tax expense (benefit) $ 136 $ ( 354 ) $ ( 555 ) $ 225

Tax benefit $ ( 363 ) $ ( 54 )

(6) Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended March 31, 2024, by reporting segment, are set forth in the table below.

Specialty Technology Solutions Modern Communications & Cloud Total

The changes in the carrying amount of goodwill for the three months ended September 30, 2024, by reporting segment, are set forth in the table below.

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Balance at June 30, 2024 $ 146,108 $ 60,193 $ 206,301

Goodwill disposed upon business sale — ( 8,539 ) ( 8,539 )

Additions 16,048 9,078 25,126

Foreign currency translation adjustment 245 1,184 1,429

Balance at March 31, 2024 $ 16,370 $ 191,246 $ 207,616

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2024.

Balance at September 30, 2024 $ 162,401 $ 70,455 $ 232,856

The following table shows changes in the amount recognized for net identifiable intangible assets for the three months ended September 30, 2024.

Net Identifiable Intangible Assets

1 unchanged sentence

Balance at June 30, 2024 $ 37,634

Intangibles disposed upon business sale ( 14,927 )

Additions 44,500

Amortization expense ( 4,358 )

Foreign currency translation adjustment 24

Balance at March 31, 2024 $ 41,510

Balance at September 30, 2024 $ 77,800

(7) Short-Term Borrowings and Long-Term Debt

The following table presents the Company’s debt at March 31, 2024 and June 30, 2023.

March 31, 2024 June 30, 2023

The following table presents the Company’s debt at September 30, 2024 and June 30, 2024.

September 30, 2024 June 30, 2024

(in thousands)

21 unchanged sentences

Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the Amended Credit Agreement plus an additional margin ranging from 1.00 % to 1.75 %, depending upon the Company’s leverage ratio plus, if applicable, certain mandatory costs.

During the quarter and nine months ended March 31, 2024, all of the Company's borrowings under the Amended Credit Agreement were U.S.

During the quarter ended September 30, 2024, all of the Company's borrowings under the Amended Credit Agreement were U.S.

dollar loans.

The spread in effect as of March 31, 2024 was 1.25 %, plus a 0.10 % credit spread adjustment

for SOFR-based loans and 0.25 % for alternate base rate loans.

The commitment fee rate in effect at March 31, 2024 was 0.20 %.

The spread in effect as of September 30, 2024 was 1.00 %, plus a 0.10 % credit spread adjustment for SOFR-based loans and 0.00 % for alternate base rate loans.

The commitment fee rate in effect at September 30, 2024 was 0.15 %.

The effective interest rates for the term loan were 5.95 % and 6.44 % as of September 30, 2024 and June 30, 2024, respectively.

The Amended Credit Agreement includes customary representations, warranties and affirmative and negative covenants, including financial covenants.

2 unchanged sentences

In the event of a default, customary remedies are available to the lenders, including acceleration and increased interest rates.

The Company was in compliance with all covenants under the Amended Credit Agreement at March 31, 2024.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the nine month periods ended March 31, 2024 and 2023 was $ 94.6 million an d $ 227.2 million, respectively.

There was $ 350.0 million and $ 171.0 million available for additional borrowings as of March 31, 2024 and June 30, 2023, respectively.

The effective interest rates for the revolving line of credit were 6.68 % and 6.74 % as of March 31, 2024 and June 30, 2023, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility at March 31, 2024 or June 30, 2023.

The Company was in compliance with all covenants under the Amended Credit Agreement at September 30, 2024.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the three month periods ended September 30, 2024 and 2023 was $ 144.0 million an d $ 200.9 million, respectively.

There was $ 350.0 million and $ 349.9 million available for additional borrowings as of September 30, 2024 and June 30, 2024, respectively.

The effective interest rates for the revolving line of credit were 5.95 % and 6.44 % as of September 30, 2024 and June 30, 2024, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility at September 30, 2024 or June 30, 2024.

Mississippi Revenue Bond

3 unchanged sentences

The agreement also provides the bondholder with a put option, exercisable only within 180 days of each fifth anniversary of the agreement, requiring the Company to pay back the bonds at 100 % of the principal amount outstanding.

At March 31, 2024, the Company was in compliance with all covenants under this bond.

The interest rates at March 31, 2024 and June 30, 2023 were 6.28 % and 6.11 %, respectively.

At September 30, 2024, the Company was in compliance with all covenants under this bond.

The interest rates at September 30, 2024 and June 30, 2024 were 6.15 % and 6.28 %, respectively.

Debt Issuance Costs

At March 31, 2024, net debt issuance costs associated with the credit facility and bond totaled $ 1.3 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

At September 30, 2024, net debt issuance costs associated with the credit facility and bond totaled $ 1.1 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

(8) Derivatives and Hedging Activities

8 unchanged sentences

dollar, Brazilian real, euro, British pound and Canadian dollar.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $ 27.7 million and $ 34.3 million for the exchange of foreign currencies at March 31, 2024 and June 30, 2023, respectively.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $ 33.7 million and $ 27.5 million for the exchange of foreign currencies at September 30, 2024 and June 30, 2024, respectively.

To date, the Company has chosen not to designate these derivatives as hedging instruments, and accordingly, these instruments are adjusted to fair value through earnings in other income and expense.

Summarized financial information related to these derivative contracts and changes in the underlying value of the foreign currency exposures included in the Condensed Consolidated Income Statements for the quarters and nine months ended March 31, 2024 and 2023 are as follows:

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

Quarter ended

September 30,

(in thousands)

Net foreign exchange derivative contract (gains) losses $ ( 526 ) $ 564 $ 132 $ 1,873

Net foreign currency transactional and re-measurement losses (gains) 1,034 ( 59 ) 1,500 ( 98 )

Net foreign exchange derivative contract losses (gains) $ 941 $ ( 368 )

Net foreign currency transactional and re-measurement (gains) losses ( 607 ) 1,064

Net foreign currency exchange losses $ 334 $ 696

1 unchanged sentence

Foreign exchange gains and losses are generated as the result of fluctuations in the value of the U.S.

dollar versus the Brazilian real, the U.S.

dollar versus the euro, the British pound versus the euro, and the Canadian dollar versus the U.S.

dollar versus the Brazilian real and the Canadian dollar versus the U.S.

Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments.

6 unchanged sentences

To the extent the swaps are effective in offsetting the variability of the hedged cash flows, changes in the fair value of the swaps are not included in current earnings but are reported as other comprehensive income (loss).

There was no ineffective portion to be recorded as an adjustment to earnings for the quarters and nine months ended March 31, 2024 and 2023.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive Income for the quarters and nine months ended March 31, 2024 and 2023, are as follows:

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

There was no ineffective portion to be recorded as an adjustment to earnings for the quarters ended September 30, 2024 and 2023.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive Income for the quarters ended September 30, 2024 and 2023, are as follows:

Quarter ended

September 30,

(in thousands)

Net interest income recognized as a result of interest rate swap $ ( 508 ) $ ( 759 )

Unrealized gain (loss) in fair value of interest rate swap 1,093 ( 1,013 ) 1,021 1,837

Net increase (decrease) in accumulated other comprehensive income 198 ( 1,569 ) ( 1,655 ) 968

Unrealized (loss) gain in fair value of interest rate swap ( 885 ) 974

Net (decrease) increase in accumulated other comprehensive income ( 1,393 ) 215

Income tax effect ( 343 ) 62

Net increase (decrease) in accumulated other comprehensive income, net of tax $ 148 $ ( 1,165 ) $ ( 1,246 ) $ 718

The Company used the following derivative instruments at March 31, 2024 and June 30, 2023, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

March 31, 2024 June 30, 2023

Net (decrease) increase in accumulated other comprehensive income, net of tax $ ( 1,050 ) $ 153

The Company used the following derivative instruments at September 30, 2024 and June 30, 2024, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

September 30, 2024 June 30, 2024

Balance Sheet Location Fair Value of

10 unchanged sentences

Foreign exchange contracts Accrued expenses and other current liabilities — — — $ 12

Foreign currency hedge Accrued expenses and other current liabilities $ 53 — — —

(9) Fair Value of Financial Instruments

6 unchanged sentences

The carrying value of debt is considered to approximate fair value, as the Company’s debt instruments are indexed to a variable rate using the market approach (Level 2).

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at March 31, 2024:

The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at September 30, 2024:

(Level 1) Significant

(Level 2) Significant

(in thousands)

Deferred compensation plan investments, current and non-current portion $ 30,995 $ 30,995 $ —

Deferred compensation plan investments, current and non-current $ 32,176 $ 32,176 $ — $ —

Forward foreign currency exchange contracts 17 — 17 —

Interest rate swap agreement 1,305 — 1,305 —

Foreign currency hedge 27 — 27

Total assets at fair value $ 33,498 $ 32,176 $ 1,322 $ —

Deferred compensation plan investments, current and non-current portion $ 31,005 $ 31,005 $ —

Forward foreign currency exchange contracts 15 — 15

Deferred compensation plan investments, current and non-current $ 32,176 $ 32,176 $ — $ —

Foreign currency hedge 53 — 53 —

Liability for contingent consideration, current and non-current 17,200 — — 17,200

Total liabilities at fair value $ 49,429 $ 32,176 $ 53 $ 17,200

1 unchanged sentence

(Level 1) Significant

(Level 2) Significant

(in thousands)

Deferred compensation plan investments, current and non-current portion $ 28,209 $ 28,209 $ —

Forward foreign currency exchange contracts 1 — 1

Deferred compensation plan investments, current and non-current $ 31,014 $ 31,014 $ — $ —

Foreign currency hedge 345 — 345 —

1 unchanged sentence

Total assets at fair value $ 34,057 $ 31,014 $ 3,043 $ —

Deferred compensation plan investments, current and non-current portion $ 28,229 $ 28,229 $ —

Deferred compensation plan investments, current and non-current $ 31,014 $ 31,014 $ — $ —

Forward foreign currency exchange contracts 12 — 12 —

Total liabilities at fair value $ 31,026 $ 31,014 $ 12 $ —

5 unchanged sentences

See Note 8 - Derivatives and Hedging Activities .

The Company recorded a contingent consideration liability at the acquisition date of both Advantix and Resourcive.

These liabilities represent the amounts payable to former owners, as outlined under the terms of the asset purchase agreements, based upon the achievement of a projected earnings before interest expense, taxes, depreciation and amortization, net of specific pro forma adjustments.

The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets.

In accordance with ASC 805, the Company will revalue the contingent consideration liability at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income.

The fair value of the contingent consideration liability associated with future earnout payments is based on several factors, including but not limited to:

• estimated future results, net of pro forma adjustments set forth in the purchase agreements;

• a risk premium reflective of the Company’s creditworthiness and market risk premium associated with the United States markets.

Advantix Solutions Group, Inc ("Advantix") is part of the Specialty Technology Solutions segment.

The fair value of the contingent consideration is determined using a static discounted cash flow model.

The fair value of the liability for the contingent consideration related to Advantix recognized at September 30, 2024 was $ 7.5 million, of which $ 1.9 million is classified as current.

The fair value at September 30, 2024 approximated the fair value recognized upon acquisition in August 2024, as such no change in fair value of contingent consideration was recognized in the Condensed Consolidated Income Statements.

Earnout payments to the former owners of Advantix are payable based on results from fiscal year 2025 to fiscal year 2028.

Secure Path Networks, LLC dba Resourcive ("Resourcive") is part of the Intelisys & Advisory segment.

The fair value of the contingent consideration for Resourcive is determined using a Monte Carlo simulation.

The fair value of the liability for the contingent consideration related to Resourcive recognized at September 30, 2024 was $ 9.7 million, all of which is classified as non-current and is due to the former owners of Resourcive during fiscal year 2027.

Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities related to Advantix and Resourcive at September 30, 2024 were as follows.

Acquisition Reporting Period Valuation Technique Significant Unobservable Inputs Weighted Average Rates

Advantix September 30, 2024 Discounted cash flow Adjusted EBITDA risk premium 15.7 %

Adjusted EBITDA growth rate 19.8 %

Resourcive September 30, 2024 Monte Carlo Adjusted EBITDA risk premium 13.6 %

Simulated commission growth percentage 23.7 %

(10) Segment Information

The Company is a leading provider of technology solutions and services to customers in specialty technology markets.

The Company has two reportable segments, based on technology type.

The Company has two reportable segments based on sales model.

Specialty Technology Solutions Segment

The Specialty Technology Solutions segment includes the Company’s business in mobility and barcode, POS, payments, security and networking technologies as summarized below:

• Mobility and barcode solutions - mobile computing, barcode scanners and imagers, radio frequency identification devices, barcode printing and related services

The Specialty Technology Solutions segment operates primarily in the United States, Canada and Brazil and includes specialty technology solutions distributed through a wholesale sales model.

The specialty technology solutions include the following:

• Mobility and barcode solutions - mobile computing, barcode scanners and imagers, radio frequency identification devices, barcode printing and related services, wireless enablement and connectivity tools;

• POS and payments solutions - POS systems, integrated POS software platforms, self-service kiosks including self-checkout, payment terminals and mobile payment devices;

1 unchanged sentence

• Networking solutions - switching, routing and wireless products and software;

The Company primarily has business operations within this segment in the United States, Canada and Brazil.

Modern Communications & Cloud Segment

The Modern Communications & Cloud segment includes the Company’s business in communications and collaboration, connectivity and cloud services.

Communications and collaboration solutions, delivered in the cloud, on-premise or hybrid, include voice, video, integration of communication platforms and contact center solutions.

The Intelisys connectivity and cloud services include telecom, cable, Unified Communications as a Service, Contact Center as a Service, Infrastructure as a Service, Software-Defined Wide-Area Network and other cloud services.

• Communications and collaboration solutions - voice, video, communication platform integration and contact center solutions.

Intelisys & Advisory Segment

The Intelisys & Advisory segment operates primarily in the United States and distributes connectivity and cloud services through an agency sales model.

The connectivity and cloud services include telecom, cable, Unified Communications as a Service (UCaaS), Contact Center as a Service (CCaaS), Infrastructure as a Service (IaaS), Software-Defined Wide-Area Network (SD-WAN) and other cloud services.

This segment includes SaaS and subscription services, which the Company offers using digital tools and platforms.

The Company's business operations within this segment primarily are in the United States, Canada and Brazil.

Selected financial information for each business segment is presented below:

Quarter ended Nine months ended

March 31, March 31,

2024 2023 2024 2023

Quarter ended

September 30,

(in thousands)

Specialty Technology Solutions $ 752,299 $ 853,950

Modern Communications & Cloud 268,895 319,867 999,770 1,071,043

Intelisys & Advisory 23,281 22,355

$ 775,580 $ 876,305

1 unchanged sentence

Specialty Technology Solutions $ 4,626 $ 4,544

Modern Communications & Cloud 3,287 3,717 10,621 11,102

Intelisys & Advisory 2,125 1,954

Corporate 720 720

2 unchanged sentences

Specialty Technology Solutions $ 16,738 $ 17,636

Modern Communications & Cloud 12,989 14,468 40,004 47,253

Corporate ( 4,527 ) — ( 5,871 ) —

Intelisys & Advisory 6,413 6,649

Corporate (a)

( 5,521 ) ( 201 )

$ 17,630 $ 24,084

Capital expenditures:

Specialty Technology Solutions $ ( 2,228 ) $ ( 2,297 )

Modern Communications & Cloud ( 1,853 ) ( 1,766 ) ( 5,152 ) ( 5,003 )

Intelisys & Advisory ( 147 ) ( 18 )

$ ( 2,375 ) $ ( 2,315 )

1 unchanged sentence

United States and Canada $ 715,989 $ 792,464

International 81,353 76,722 256,067 263,017

63,561 85,305

Less intercompany sales ( 3,970 ) ( 1,464 )

$ 775,580 $ 876,305

March 31, 2024 June 30, 2023

(a) For the quarter ended September 30, 2024, the amounts shown above include restructuring expense, acquisition and divestiture expenses as well as cyberattack restoration costs.

For the quarter ended September 30, 2023, the amounts above include cyberattack restoration costs.

(b) Countries outside of Brazil represent $ 0.1 million, or 0.2 % of sales, for the quarter ended September 30, 2024 and $ 2.4 million, or 2.8 % of sales, for the quarter ended September 30, 2023.

September 30, 2024 June 30, 2024

(in thousands)

Specialty Technology Solutions $ 1,563,728 $ 1,499,146

Modern Communications & Cloud 890,122 964,066

Corporate — —

Intelisys & Advisory 222,781 279,886

$ 1,786,509 $ 1,779,032

1 unchanged sentence

United States and Canada $ 19,836 $ 21,613

International 12,748 10,056

Brazil 13,104 11,888

$ 32,940 $ 33,501

In accordance with Accounting Standards Codification ("ASC") 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset.

The Company also determines if the lease meets the classification criteria for an operating lease versus a

finance lease under ASC 842.

control the asset.

The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842.

Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years.

3 unchanged sentences

Finance leases are recorded as property and equipment, net , accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets.

The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at March 31, 2024 and the consolidated financial statements at June 30, 2023.

The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at September 30, 2024 and the consolidated financial statements at June 30, 2024.

Operating lease right-of-use assets and lease liabilities are recognized at the commencement date based on the net present value of future minimum lease payments over the lease term.

5 unchanged sentences

Further, the Company has elected the practical expedient to recognize all lease and non-lease components as a single lease component, where applicable.

The following table presents amounts recorded on the Condensed Consolidated Balance Sheets related to operating leases at March 31, 2024 and June 30, 2023:

March 31, 2024 June 30, 2023

The following table presents amounts recorded on the Condensed Consolidated Balance Sheets related to operating leases at September 30, 2024 and June 30, 2024:

September 30, 2024 June 30, 2024

Operating leases Balance Sheet location (in thousands)

2 unchanged sentences

Long-term operating lease liabilities Other long-term liabilities $ 7,574 $ 6,507

The following table presents amounts recorded in operating lease expense as part of selling general and administrative expenses on the Condensed Consolidated Income Statements during the quarters and nine months ended March 31, 2024 and 2023.

Operating lease costs contain immaterial amounts of short-term lease costs for leases with an initial term of 12 months or less.

Quarter ended March 31, Nine months ended March 31,

2024 2023 2024 2023

Quarter ended September 30,

(in thousands)

2 unchanged sentences

$ 1,453 $ 1,592

Supplemental cash flow information related to the Company's operating leases for the nine months ended March 31, 2024 and 2023 are presented in the table below:

Nine months ended

Supplemental cash flow information related to the Company's operating leases for the three months ended September 30, 2024 and 2023 are presented in the table below:

Quarter ended September 30,

(in thousands)

1 unchanged sentence

Right-of-use assets obtained in exchange for lease obligations 2,461 230

The weighted-average remaining lease term and discount rate at March 31, 2024 are presented in the table below:

March 31, 2024

The weighted-average remaining lease term and discount rate at September 30, 2024 are presented in the table below:

September 30, 2024

Weighted-average remaining lease term 3.11 years

Weighted-average discount rate 5.20 %

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2024:

The following table presents the maturities of the Company's operating lease liabilities at September 30, 2024:

Operating leases

9 unchanged sentences

The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition.

The amount available after the impact of foreign currency translation for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.6 million and $ 3.4 million at March 31, 2024 and June 30, 2023.

The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's Condensed Consolidated Balance Sheets at March 31, 2024 and June 30, 2023:

March 31, 2024 June 30, 2023

The amount available after the impact of foreign currency translation for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.4 million and $ 3.2 million at September 30, 2024 and June 30, 2024.

September 30, 2024 June 30, 2024

(in thousands)

4 unchanged sentences

(13) Income Taxes

Income taxes for the quarters and nine months ended March 31, 2024 and 2023 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate.

Income taxes for the quarters ended September 30, 2024 and 2023 have been included in the accompanying condensed consolidated financial statements using an estimated annual effective tax rate.

In addition to applying the estimated annual effective tax rate to pre-tax income, the Company includes certain items treated as discrete events to arrive at an estimated overall tax provision.

During the quarter ended March 31, 2024, a discrete net tax benefit of $ 1.5 million was recorded, which is attributable to an income tax recovery in Brazil related to a prior period.

The Company’s effective tax rate of 28.7 % and 21.0 % for the quarter and nine months ended March 31, 2024, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, discrete items, nondeductible expenses and state income taxes.

The Company's effective tax rates were 29.1 % and 27.8 % for the quarter and nine months ended March 31, 2023.

As of March 31, 2024, the Company is not permanently reinvested with respect to all earnings generated by foreign operations.

During the quarter ended September 30, 2024, a discrete net tax benefit of $ 0.8 million was recorded, which is attributable to stock compensation.

During the quarter ended September 30, 2023, a discrete net tax benefit of $ 1.5 million was recorded for additional foreign tax credits permitted as a result of the issuance of IRS Notice 2023-55.

The Company’s effective tax rate of 26.1 % for the quarter ended September 30, 2024, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, discrete items, nondeductible expenses and state income taxes.

The Company's effective tax rate was 19.4 % for the quarter ended September 30, 2023.

As of September 30, 2024, the Company is not permanently reinvested with respect to all earnings generated by foreign operations.

The Company has determined that there is no material deferred tax liability for federal, state and withholding tax related to undistributed earnings.

During the nine months ended March 31, 2024, foreign subsidiaries did not repatriate cash to the United States.

During the three months ended September 30, 2024, foreign subsidiaries did not repatriate cash to the United States.

There is no certainty to the timing of any future distributions of such earnings to the U.S.

in whole or in part.

The Company had approximately $ 1.2 million of total gross unrecognized tax benefits at March 31, 2024 and June 30, 2023.

Of this total at March 31, 2024, approximately $ 1.0 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

The Company had approximately $ 1.1 million of total gross unrecognized tax benefits at September 30, 2024 and June 30, 2024.

Of this total at September 30, 2024, approximately $ 0.9 million represents the amount of unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate.

The Company does not believe that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

At March 31, 2024 and June 30, 2023, the Company had approximately $ 1.2 million accrued for interest and penalties.

At September 30, 2024 and June 30, 2024, the Company had approximately $ 1.3 million accrued for interest and penalties.

The Company conducts business globally and one or more of its subsidiaries files income tax returns in the U.S.

3 unchanged sentences

income tax examinations by tax authorities for the years before June 30, 2019.

(14) Business Sale

On December 19, 2023, the Company completed the sale of its UK-based intY business.

The Company retained its CASCADE cloud services distribution platform which has been used to grow the Cisco and Microsoft subscription businesses in the United States and Brazil.

Under the stock purchase agreement, the Company received proceeds of $ 18.0 million in cash for the sale, net of cash transferred.

The business sale resulted in a $ 14.5 million gain on sale after considering the net assets sold.

The impact of this sale was not material to the consolidated financial statements.

(15) Restructuring

In January 2024, as part of a strategic review of organizational structure and operations, the Company executed a cost reduction and restructuring program to align our cost structure with demand expectations in our hardware business.

These actions are expected to result in approximately $ 10.0 million in annualized savings in selling, general and administrative expenses.

The following table presents the restructuring and employee separation costs incurred for the quarter and nine months ended March 31, 2024:

Quarter ended March 31, 2024 Nine months ended March 31, 2024

(14) Restructurings

In January 2024 and September 2024, as part of a strategic review of organizational structure and operations, the Company executed cost reduction and restructuring programs to align our cost structure with demand expectations in our business.

The actions taken in January 2024 and September 2024 are expected to result in approximately $ 10.0 million and $ 10.5 million in annualized savings in selling, general and administrative expenses, respectively.

The following table presents the restructuring and employee separation costs incurred for the quarters ended September 30, 2024 and 2023:

Quarter ended September 30,

(in thousands)

Employee separation and benefit costs $ 5,068 $ —

For the quarter and nine months ended March 31, 2024, all restructuring costs are recognized in the Corporate reporting unit and have not been allocated to the Specialty Technology Solutions or Modern Communications & Cloud segments.

For the quarter ended September 30, 2024, all restructuring costs are recognized in the Corporate reporting unit and have not been allocated to the Specialty Technology Solutions or Intelisys & Advisory segments.

Accrued restructuring costs are included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.

The following table represents activity for the nine months ended March 31, 2024:

The following table represents activity for the three months ended September 30, 2024:

Accrued Expenses

3 unchanged sentences

Cash payments ( 2,078 )

Balance at March 31, 2024 $ 2,798

The remaining balance as of March 31, 2024 of $ 2.8 million is expected to be paid through the third quarter of fiscal year 2025.

Balance at September 30, 2024 $ 4,619

The remaining balance as of September 30, 2024 of $ 4.6 million is expected to be paid through the third quarter of fiscal year 2027.

(15) Acquisitions

On August 8, 2024, ScanSource acquired Resourcive, a leading technology advisor.

Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses, advising clients on value creation strategies that are enabled by technology.

On August 15, 2024 , ScanSource acquired Advantix, a VAR-focused, managed connectivity experience provider specializing in wireless enablement solutions.

The combined initial purchase price of these acquisitions, net of cash acquired, was approximately $ 56.8 million .

The Advantix acquisition is included in the Specialty Technology Solutions segment, and the Resourcive acquisition is included in the Intelisys & Advisory segment.

Both acquisitions included future earnout payments, and the Company recorded contingent consideration liabilities at the acquisition dates representing the fair value of estimated amounts payable to former owners.

See Note 9 - Fair Value of Financial Instruments for the related disclosures regarding the contingent consideration liabilities recognized in connection with these acquisitions.

The purchase prices were allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction dates.

Intangible assets acquired include trade names, customer relationships, and developed technology.

See Note 6 - Goodwill and Other Identifiable Intangible Assets for the amounts of goodwill and intangible assets recognized in connection with these acquisitions.

The allocation of the purchase prices to the assets and liabilities acquired, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date.

The impact of these acquisitions was not material to the consolidated financial statements.

The Company recognized $ 0.4 million for the quarter ended September 30, 2024 in acquisition-related costs included in selling, general and administrative expenses on the Condensed Consolidated Income Statements.

(16) Business Sale

On December 19, 2023, the Company completed the sale of its UK-based intY business.

The Company retained its CASCADE cloud services distribution platform which has been used to grow the Cisco and Microsoft subscription businesses in the United States and Brazil.

Under the stock purchase agreement, the Company received proceeds of $ 17.6 million in cash for the sale, net of cash transferred.

The business sale resulted in a $ 14.2 million gain on sale after considering the net assets sold.

The impact of this sale was not material to the consolidated financial statements.

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-Q

Item 1. Financial Statements