What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-05-08 · 202 added, 259 removed, 477 unchanged (49% of the section changed)

4 unchanged sentences

(In thousands, except share information)

March 31, 2025 June 30, 2024

September 30, 2025 June 30, 2025

Current assets:

Cash and cash equivalents $ 124,924 $ 126,157

Accounts receivable, less allowance of $ 27,032 at March 31, 2025

Accounts receivable, less allowance of $ 29,226 at September 30, 2025

and $ 27,821 at June 30, 2025

18 unchanged sentences

Long-term debt, net of current portion 126,047 128,288

Borrowings under revolving credit facility — 50

Long-term portion of contingent consideration 16,255 17,782

6 unchanged sentences

Common stock, no par value;

45,000,000 shares authorized, 22,894,413 and 24,243,848 shares issued and outstanding at March 31, 2025 and June 30, 2024, respectively

45,000,000 shares authorized, 22,067,128 and 22,217,421 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively

Retained earnings 1,024,720 1,020,833

8 unchanged sentences

(In thousands, except per share data)

Quarter ended Nine months ended

March 31, March 31,

2025 2024 2025 2024

Quarter ended

September 30,

Net sales $ 739,650 $ 775,580

9 unchanged sentences

Interest income ( 3,180 ) ( 2,659 )

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

Other (income) expense, net 173 ( 4,782 )

12 unchanged sentences

(In thousands)

Quarter ended Nine months ended

March 31, March 31,

2025 2024 2025 2024

Quarter ended

September 30,

Net income $ 19,878 $ 16,974

Unrealized (loss) gain on hedged transaction, net of tax ( 462 ) 148 ( 1,245 ) ( 1,246 )

Realized foreign currency on sale of business — — — ( 3,805 )

Unrealized loss on hedged transaction, net of tax ( 230 ) ( 1,050 )

Foreign currency translation adjustment 3,966 4,109

17 unchanged sentences

Balance at September 30, 2025 22,067,128 $ — $ 1,024,720 $ ( 110,688 ) $ 914,032

Net income — $ — $ 17,053 $ — $ 17,053

Unrealized gain on hedged transaction, net of tax — — — 266 266

Foreign currency translation adjustment — — — ( 18,744 ) ( 18,744 )

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 102,489 2,508 — — 2,508

Common stock repurchased, including excise tax ( 495,053 ) ( 8,504 ) ( 15,831 ) — ( 24,335 )

Share-based compensation — 3,021 — — 3,021

Balance at December 31, 2024 23,612,543 $ — $ 1,031,934 $ ( 131,272 ) $ 900,662

Net income — $ — $ 17,431 $ — $ 17,431

Unrealized loss on hedged transaction, net of tax — — — ( 462 ) ( 462 )

Foreign currency translation adjustment — — — 10,081 10,081

Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 1,063 — — — —

Common stock repurchased, including excise tax ( 719,193 ) ( 2,899 ) ( 25,966 ) — ( 28,865 )

Share-based compensation — 2,899 — — 2,899

Balance at March 31, 2025 22,894,413 $ — $ 1,023,399 $ ( 121,653 ) $ 901,746

See accompanying notes to these condensed consolidated financial statements.

9 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 on sale of 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, including excise tax ( 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.

3 unchanged sentences

(In thousands)

Nine months ended

Three months ended

September 30,

Cash flows from operating activities:

Net income $ 19,878 $ 16,974

Net income from continuing operations 19,878 16,974

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

Gain on sale of business — ( 14,533 )

Depreciation and amortization 6,200 7,471

17 unchanged sentences

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

Proceeds from sale of business, net of cash transferred 2,569 17,978

Net cash (used in) provided by investing activities ( 59,873 ) 10,693

Net cash used in investing activities ( 2,395 ) ( 59,224 )

Cash flows from financing activities:

3 unchanged sentences

Repayments on finance lease obligation ( 271 ) ( 275 )

Contingent consideration payments ( 1,375 ) —

Exercise of stock options 4,834 6,971

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 901 608

(Decrease) increase in cash and cash equivalents ( 39,173 ) 122,872

Decrease in cash and cash equivalents ( 1,233 ) ( 40,416 )

Cash and cash equivalents at beginning of period 126,157 185,460

7 unchanged sentences

ScanSource, Inc.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading hybrid distributor connecting devices to the cloud and acce lerating growth for channel partners across hardware, software as a service ("SaaS"), and connectivity and cloud services.

ScanSource uses multiple sales models to offer hybrid distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services.

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

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.

(together with its subsidiaries referred to as “the Company” or “ScanSource”) is a leading technology distributor connecting devices to the cloud and accelerating growth for channel sales partners across hardware, software as a service ("SaaS"), connectivity and cloud services.

ScanSource uses multiple sales models to offer technology distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services.

The Company operates primarily in the United States and Brazil.

The Company's two operating segments, Specialty Technology Solutions and Intelisys & Advisory, represent the different sales models the Company uses in executing its technology 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, 2025 and June 30, 2024, the results of operations for the quarters and nine months ended March 31, 2025 and 2024, the condensed consolidated statements of comprehensive income for the quarters and nine months ended March 31, 2025 and 2024, the condensed consolidated statements of shareholders' equity for the quarters and nine months ended March 31, 2025 and 2024 and the condensed consolidated statements of cash flows for the nine months ended March 31, 2025 and 2024.

The results of operations for the quarter and nine months ended March 31, 2025 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, 2025 and June 30, 2025, the results of operations for the quarters ended September 30, 2025 and 2024, the condensed consolidated statements of comprehensive income for the quarters ended September 30, 2025 and 2024, the condensed consolidated statements of shareholders' equity for the quarters ended September 30, 2025 and 2024 and the condensed consolidated statements of cash flows for the three months ended September 30, 2025 and 2024.

The results of operations for the quarters ended September 30, 2025 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, 2025.

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, 2025 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.

There have been no material changes to the Company’s significant accounting policies for the quarter ended September 30, 2025 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, 2025.

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, 2025.

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 $ 5.9 million are included in accounts payable on the condensed consolidated balance sheets at March 31, 2025 and June 30, 2024, respectively.

As a result, checks released but not yet cleared from these accounts were approximately $ 0.1 million and are included in accounts payable on the condensed consolidated balance sheets at September 30, 2025 and June 30, 2025.

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 $ 2.3 million and $ 8.1 million for the quarter and nine months ended March 31, 2025, respectively, and $ 2.7 million and $ 8.4 million for the quarter and nine months ended March 31, 2024, respectively.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.2 million and $ 0.7 million for the quarter and nine months ended March 31, 2025, respectively, and $ 0.3 million and $ 0.8 million for the quarter and nine months ended March 31, 2024, respectively.

The Company's depreciation expense related to selling, general and administrative costs totaled $ 1.6 million and $ 2.9 million for the quarters ended September 30, 2025 and September 30, 2024, respectively.

Depreciation expense reported as part of cost of goods sold on the condensed consolidated income statements totaled $ 0.2 million and $ 0.3 million for the quarters ended September 30, 2025 and September 30, 2024, 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 $ 4.9 million and $ 14.3 million for the quarter and nine months ended March 31, 2025, respectively, and $ 3.8 million and $ 12.0 million for the quarter and nine months ended March 31, 2024, respectively.

Intangible amortization expense totaled $ 4.4 million for the quarters ended September 30, 2025 and September 30, 2024.

Recent Accounting Pronouncements

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

2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

This ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU is applicable to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and subsequent interim periods, with early application permitted.

The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No.

8 unchanged sentences

The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.” This standard is intended to improve the operability and application of guidance related to capitalized software development costs.

The ASU is effective for annual reporting periods beginning after December 15, 2027, and subsequent interim periods, with early application permitted.

The Company is currently evaluating the impact of the application of this ASU on its consolidated financial statements and disclosures.

The Company has reviewed other newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated financial statements as a result of future adoption.

(2) Trade Accounts and Notes Receivable, Net

The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from customers’ failure to make payments on accounts receivable due to the Company.

The Company has notes receivable with certain customers, which are included in “Accounts receivable, less allowance” in the Condensed Consolidated Balance Sheets.

The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from channel sales partners’ failure to make payments on accounts receivable due to the Company.

The Company has notes receivable with certain channel sales partners, which are included in “Accounts receivable, less allowance” in the Condensed Consolidated Balance Sheets.

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 channel sales partners, (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, 2025 are set forth in the table below.

The changes in the allowance for doubtful accounts for the three months ended September 30, 2025 are set forth in the table below.

June 30, 2025 Amounts Charged to Expense Write-offs Other (1)

March 31, 2025

September 30, 2025

(in thousands)

Trade accounts and current notes receivable allowance $ 27,821 $ 1,928 $ ( 743 ) $ 220 $ 29,226

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the nine months ended March 31, 2025.

(1) "Other" amounts include recoveries and the effect of foreign currency fluctuations for the three months ended September 30, 2025.

(3) Revenue Recognition

The Company uses multiple sales models to offer hybrid distribution solutions from leading suppliers of specialty technologies and connectivity and cloud services.

The Company provides technology solutions and services from the world's leading suppliers of mobility and barcode, POS, payment terminals, physical security, networking communications, connectivity and cloud services.

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

23 unchanged sentences

Contract Balances

The Company records contract assets and liabilities for payments received from customers in advance of services performed.

These assets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions

where control has not yet passed to the customer.

The Company records contract assets for services performed in advance of payments being received from channel sales partners.

The Company records contract liabilities for payments received from channel sales partners in advance of services performed.

These a ssets and liabilities are the result of the sales of the Company's self-branded warranty programs and other transactions where control has not yet passed to the customer.

These amounts are immaterial to the consolidated financial statements for the periods presented.

1 unchanged sentence

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

Quarter ended March 31, 2025

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service

Products and services $ 664,365 $ 864 $ 665,229

Recurring revenue (a)

14,068 25,550 39,618

$ 678,433 $ 26,414 $ 704,847

Nine months ended March 31, 2025

Specialty Technology Solutions Intelisys & Advisory Total

(in thousands)

Revenue by product/service:

Products and services $ 2,115,958 $ 2,074 $ 2,118,032

Recurring revenue (a)

38,051 71,841 109,892

$ 2,154,009 $ 73,915 $ 2,227,924

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

Quarter ended March 31, 2024

Quarter ended September 30, 2025

Specialty Technology Solutions Intelisys & Advisory Total

5 unchanged sentences

$ 715,447 $ 24,203 $ 739,650

Nine months ended March 31, 2024

Quarter ended September 30, 2024

Specialty Technology Solutions Intelisys & Advisory Total

5 unchanged sentences

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

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

(a) Recurring revenue represents revenue primarily from agency commissions, managed connectivity, 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,

2025 2024 2025 2024

Quarter ended

September 30,

(in thousands, except per share data)

5 unchanged sentences

Net income per common share, diluted $ 0.89 $ 0.69

For the quarter and nine months ended March 31, 2025, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 241,641 and 245,303 , respectively.

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 quarters ended September 30, 2025 and 2024, weighted-average shares outstanding excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were 295,562 and 109,450 , respectively.

(5) Accumulated Other Comprehensive Loss

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

March 31, 2025 June 30, 2024

September 30, 2025 June 30, 2025

(in thousands)

2 unchanged sentences

Accumulated other comprehensive loss $ ( 110,688 ) $ ( 114,424 )

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

Quarter ended March 31, Nine months ended March 31,

2025 2024 2025 2024

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

Quarter ended September 30,

(in thousands)

Tax (benefit) expense $ ( 146 ) $ 136 $ ( 352 ) $ ( 555 )

Tax benefit $ ( 45 ) $ ( 363 )

(6) Goodwill and Other Identifiable Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended March 31, 2025, by reporting segment, are set forth in the table below.

The changes in the carrying amount of goodwill for the three months ended September 30, 2025, by reporting segment, are set forth in the table below.

Specialty Technology Solutions Intelisys & Advisory Total

1 unchanged sentence

Balance at June 30, 2025 $ 159,779 $ 71,041 $ 230,820

Additions 13,442 9,334 22,776

Foreign currency translation adjustment 317 ( 5 ) 312

Balance at March 31, 2025 $ 159,168 $ 69,667 $ 228,835

The following table shows changes in the amount recognized for net identifiable intangible assets for the nine months ended March 31, 2025.

Balance at September 30, 2025 $ 160,096 $ 71,036 $ 231,132

The following table shows changes in the amount recognized for net identifiable intangible assets for the three months ended September 30, 2025.

Net Identifiable Intangible Assets

1 unchanged sentence

Balance at June 30, 2025 $ 62,909

Additions 44,500

Amortization expense ( 4,404 )

Foreign currency translation adjustment 5

Balance at March 31, 2025 $ 67,815

Balance at September 30, 2025 $ 58,510

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

The following table presents the Company’s debt at March 31, 2025 and June 30, 2024.

March 31, 2025 June 30, 2024

The following table presents the Company’s debt at September 30, 2025 and June 30, 2025.

September 30, 2025 June 30, 2025

(in thousands)

15 unchanged sentences

Loans denominated in U.S.

dollars, other than swingline loans, bear interest at a rate per annum equal to, at the Company’s option, (i) the adjusted term Secured Overnight Financing Rate ("SOFR") or adjusted daily simple SOFR plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company’s ratio of (A) total consolidated debt less up to $ 30 million of unrestricted domestic cash to (B) trailing four-quarter consolidated EBITDA measured as of the end of the most recent year

or quarter, as applicable, for which financial statements have been delivered to the Lenders (the “leverage ratio”);

or (ii) the alternate base rate plus an additional margin ranging from 0 % to 0.75 %, depending upon the Company’s leverage ratio, plus, if applicable, certain mandatory costs.

3 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, 2025, all of the Company's borrowings under the Amended Credit Agreement were U.S.

During the quarter ended September 30, 2025, all of the Company's borrowings under the Amended Credit Agreement were U.S.

dollar loans.

The spread in effect as of March 31, 2025 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 March 31, 2025 was 0.15 %.

The effective interest rates for the term loan were 5.42 % and 6.44 % as of March 31, 2025 and June 30, 2024, respectively.

The spread in effect as of September 30, 2025 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, 2025 was 0.15 % .

The effective interest rates for the term loan were 5.26 % and 5.43 % as of September 30, 2025 and June 30, 2025, 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, 2025.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the nine month periods ended March 31, 2025 and 2024 was $ 0.3 million an d $ 94.6 million, respectively.

There was $ 350.0 million and $ 349.9 million available for additional borrowings as of March 31, 2025 and June 30, 2024, respectively.

The effective interest rates for the revolving line of credit were 5.45 % and 6.44 % as of March 31, 2025 and June 30, 2024, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility at March 31, 2025 or June 30, 2024.

The Company was in compliance with all covenants under the Amended Credit Agreement at September 30, 2025.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, during the three month periods ended September 30, 2025 and 2024 was $ 1.1 million an d $ 0.1 million, respectively.

There was $ 350.0 million available for additional borrowings as of both September 30, 2025 and June 30, 2025.

The effective interest rates for the revolving line of credit were 5.28 % and 5.46 % as of September 30, 2025 and June 30, 2025, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility at September 30, 2025 or June 30, 2025.

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, 2025, the Company was in compliance with all covenants under this bond.

The interest rates at March 31, 2025 and June 30, 2024 were 5.27 % and 6.28 %, respectively.

At September 30, 2025, the Company was in compliance with all covenants under this bond.

The interest rates at September 30, 2025 and June 30, 2025 wer e 5.27 % and 5.28 %, respectively.

Debt Issuance Costs

At March 31, 2025, net debt issuance costs associated with the credit facility and bond totaled $ 1.0 million and are being amortized on a straight-line basis through the maturity date of each respective debt instrument.

At September 30, 2025, net debt issuance costs associated with the credit facility and bond totaled $ 0.8 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 $ 27.2 million and $ 27.5 million for the exchange of foreign currencies at March 31, 2025 and June 30, 2024, respectively.

The Company had contracts outstanding for purposes of managing cash flows with notional amounts of $ 22.6 million and $ 26.2 million for the exchange of foreign currencies at September 30, 2025 and June 30, 2025, 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, 2025 and 2024 are as follows:

Quarter ended Nine months ended

March 31, March 31,

2025 2024 2025 2024

Quarter ended

September 30,

(in thousands)

Net foreign exchange derivative contract losses (gains) $ 1,446 $ ( 526 ) $ ( 31 ) $ 132

Net foreign currency transactional and re-measurement (gains) losses ( 1,316 ) 1,034 243 1,500

Net foreign exchange derivative contract losses $ 655 $ 941

Net foreign currency transactional and re-measurement gains ( 307 ) ( 607 )

Net foreign currency exchange losses $ 348 $ 334

10 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, 2025 and 2024.

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, 2025 and 2024, are as follows:

Quarter ended Nine months ended

March 31, March 31,

2025 2024 2025 2024

There was no ineffective portion to be recorded as an adjustment to earnings for the quarters ended September 30, 2025 and 2024.

The components of the cash flow hedge included in the Condensed Consolidated Statement of Comprehensive Income for the quarters ended September 30, 2025 and 2024, are as follows:

Quarter ended

September 30,

(in thousands)

Net interest income recognized as a result of interest rate swap $ ( 322 ) $ ( 508 )

Unrealized (loss) gain in fair value of interest rate swap ( 298 ) 1,093 ( 438 ) 1,021

Net (decrease) increase in accumulated other comprehensive income ( 613 ) 198 ( 1,652 ) ( 1,655 )

Unrealized gain (loss) in fair value of interest rate swap 15 ( 885 )

Net decrease in accumulated other comprehensive income ( 307 ) ( 1,393 )

Income tax effect ( 77 ) ( 343 )

Net (decrease) increase in accumulated other comprehensive income, net of tax $ ( 462 ) $ 148 $ ( 1,245 ) $ ( 1,246 )

The Company used the following derivative instruments at March 31, 2025 and June 30, 2024, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

March 31, 2025 June 30, 2024

Net decrease in accumulated other comprehensive income, net of tax $ ( 230 ) $ ( 1,050 )

The Company used the following derivative instruments at September 30, 2025 and June 30, 2025, reflected in its Condensed Consolidated Balance Sheets, for the risk management purposes detailed above:

September 30, 2025 June 30, 2025

Balance Sheet Location Fair Value of

6 unchanged sentences

Forward foreign currency exchange contracts Prepaid expenses and other current assets $ — $ — $ — $ 15

Foreign currency hedge Prepaid expenses and other current assets $ 16 $ — $ 345 $ —

Interest rate swap agreement Other non-current assets $ 373 $ — $ 680 $ —

1 unchanged sentence

Forward foreign currency exchange contracts Accrued expenses and other current liabilities $ — $ 6 $ — $ —

Foreign currency hedge Accrued expenses and other current liabilities $ 89 $ — $ 290 $ —

(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, 2025:

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, 2025:

(Level 1) Significant

2 unchanged sentences

Deferred compensation plan investments, current and non-current $ 35,388 $ 35,388 $ — $ —

Forward foreign currency exchange contracts 17 — 17 —

Interest rate swap agreement 373 — 373 —

Foreign currency hedge 16 — 16 —

Total assets at fair value $ 35,761 $ 35,388 $ 373 $ —

Deferred compensation plan investments, current and non-current $ 35,388 $ 35,388 $ — $ —

Forward foreign currency exchange contracts 6 — 6 —

Foreign currency hedge 89 — 89 —

Liability for contingent consideration, current and non-current 18,039 — — 18,039

5 unchanged sentences

Deferred compensation plan investments, current and non-current $ 31,887 $ 31,887 $ — $ —

Forward foreign currency exchange contracts 15 — 15 —

Interest rate swap agreement 680 — 680 —

Foreign currency hedge 345 — 345 —

Total assets at fair value $ 32,582 $ 31,887 $ 695 $ —

Deferred compensation plan investments, current and non-current $ 31,887 $ 31,887 $ — $ —

Forward foreign currency exchange contracts 12 — 12 —

Foreign currency hedge 290 — 290 —

Liability for contingent consideration, current and non-current 19,100 — — 19,100

Total liabilities at fair value $ 51,277 $ 31,887 $ 290 $ 19,100

7 unchanged sentences

These liabilities represent the amounts payable to sellers, 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 following tables represent the Company's contingent consideration liabilities at fair value at March 31, 2025:

Quarter ended March 31, 2025

The following tables summarizes the fair value of the Company's contingent consideration liabilities at September 30, 2025 and September 30, 2024:

Contingent consideration for the quarter ended

September 30, 2025

Specialty Technology Solutions Intelisys & Advisory Total

1 unchanged sentence

Fair value at beginning of period $ 6,660 $ 12,440 $ 19,100

Payments ( 1,375 ) — ( 1,375 )

Change in fair value of contingent consideration 145 169 314

Fair value at end of period $ 5,430 $ 12,609 $ 18,039

Nine months ended March 31, 2025

Contingent consideration for the quarter ended

September 30, 2024

Specialty Technology Solutions Intelisys & Advisory Total

2 unchanged sentences

Issuance of contingent consideration 7,500 9,700 17,200

Change in fair value of contingent consideration 567 1,480 2,047

Fair value at end of period $ 7,500 $ 9,700 $ 17,200

6 unchanged sentences

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 March 31, 2025 was $ 8.1 million, of which $ 1.7 million is classified as current.

The change in fair value for the quarter and nine months ended March 31, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

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

The fair value of the liability for the contingent consideration related to Advantix recognized at September 30, 2025 was $ 5.4 million, of which $ 1.8 million is classified as current.

The change in fair value for the quarter ended September 30, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

The first earnout payment totaling $ 1.4 million was paid to the sellers of Advantix during the quarter ended September 30, 2025.

Future earnout payments to the sellers of Advantix are payable based on results through fiscal year 2028.

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 March 31, 2025 was $ 11.2 million, all of which is classified as non-current and is due to the sellers of Resourcive during fiscal year 2027.

The change in fair value for the quarter and nine months ended March 31, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

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 March 31, 2025 were as follows.

The fair value of the liability for the contingent consideration related to Resourcive recognized at September 30, 2025 was $ 12.6 million, all of which is classified as non-current and is due to the sellers of Resourcive during fiscal year 2027.

The change in fair value for the quarter ended September 30, 2025 is primarily due to the recurring amortization of the unrecognized fair value discount.

Acquisition Reporting Period Valuation Technique Significant Unobservable Inputs Weighted Average Rates

Advantix March 31, 2025 Discounted cash flow Adjusted EBITDA risk premium 15.0 %

Advantix September 30, 2025 Discounted cash flow Adjusted EBITDA risk premium 15.3 %

Adjusted EBITDA growth rate 22.0 %

Resourcive March 31, 2025 Monte Carlo Adjusted EBITDA risk premium 12.9 %

Resourcive September 30, 2025 Monte Carlo Adjusted EBITDA risk premium 12.7 %

Simulated commission growth percentage 24.2 %

(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 sales model.

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

The Company's Chief Executive Officer is our Chief Operating Decision Maker ("CODM") who evaluates how we allocate resources, assess performance and make strategic and operational decisions.

The CODM reviews key financial measures for each reportable segment based on various financial results including net sales, gross profit and operating income.

These measures are assessed in the annual budget process as well as on an actual-to-budget comparison and an actual-to-forecast comparison when making decisions about the allocation of resources to each segment.

In addition to financial results such as net sales, gross profit, and operating income, the CODM also considers a range of operational and financial metrics, including EBITDA, return on invested capital, customer metrics and other strategic indicators.

These tools support a comprehensive view of performance and inform strategic decisions across our reportable segments.

Corporate primarily includes corporate service costs that are not included in the CODM's assessment of the performance of each of the identified reportable segments.

In connection with that assessment, our CODM may exclude matters, such as charges for impairments, significant, higher-cost restructuring programs, costs associated with separation activities, acquisition costs and other related charges, certain gains and losses from acquisitions or dispositions and certain litigation settlements.

The CODM also reviews certain other measures including total assets and property and equipment by segment and geography.

Based on such evaluations, the Company has two reportable segments based on sales model.

Specialty Technology Solutions Segment

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

The Specialty Technology Solutions segment operate s primarily in the United States and Brazil and includes specialty technology solutions distributed through a wholesale/resale sales model.

This segment includes hardware, SaaS and subscription services.

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;

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

• Security solutions - video surveillance and analytics, video management software and access control;

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

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

• Mobility and barcode - mobile computing, barcode scanners and imagers, RFID (radio frequency identification devices), barcode printing and related services;

• POS - Point of Sale systems, integrated POS software platforms;

• Payment terminals - Self-service kiosks including self-checkout, payment terminals and mobile payment devices;

• Physical security - video surveillance and analytics, video management software and access control;

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

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

• Connectivity - managed connectivity and wireless enablement solutions.

Intelisys & Advisory Segment

The Intelisys & Advisory segment operates 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.

Selected financial information for each business segment is presented below:

Quarter ended Nine months ended

March 31, March 31,

The Intelisys & Advisory segment operates in the United States and consists of sales and services to both channel sales partners (Intelisys) and end users (Advisory).

As a technology services distributor, or TSD, Intelisys distributes connectivity, cloud and next-generation technologies through an agency sales model.

Channel sales partners also have access to SaaS and subscription-based services through the company’s proprietary tools, platforms and flexible routes to market.

In addition to traditional telecom services, key technology areas include:

• Connectivity & SDN (Software-Defined Networking)

• CX (Unified Communications as a Service and Contact Center as a Service)

• Cloud/Data Center

• Wireless & IoT

By offering flexible routes to market and a robust solutions portfolio, this segment helps advisors service a wide range of end users including businesses of all sizes from VSB (“Very Small Business”) to Enterprise size businesses.

Selected financial information about the Company's segments for the quarters ended September 30, 2025 and 2024 are presented below:

Specialty Technology Solutions Intelisys & Advisory Corporate (a)

Quarter ended September 30, 2025:

Net Sales $ 715,447 $ 24,203 $ — $ 739,650

Cost of sales 631,544 633 — 632,177

Gross profit 83,903 23,570 — 107,473

Other operating expenses (b)

63,528 17,752 290 81,570

(in thousands)

Specialty Technology Solutions $ 678,433 $ 729,834 $ 2,154,009 $ 2,445,298

Intelisys & Advisory 26,414 22,765 73,915 68,398

Operating income (loss) $ 20,375 $ 5,818 $ ( 290 ) $ 25,903

Other Segment Items

Depreciation and amortization (c)

$ 3,970 $ 2,230 $ — $ 6,200

Depreciation and amortization:

Specialty Technology Solutions $ 5,016 $ 3,958 $ 14,759 $ 13,034

Intelisys & Advisory 2,227 2,065 6,650 5,977

Corporate 248 719 1,686 2,206

Change in fair value of contingent consideration (d)

$ 145 $ 169 $ — $ 314

Change in fair value of contingent consideration:

Specialty Technology Solutions $ 94 $ — $ 567 $ —

Intelisys & Advisory 810 — 1,480 —

Capital expenditures $ ( 2,174 ) $ ( 221 ) $ — $ ( 2,395 )

Quarter ended September 30, 2024:

Net Sales $ 752,299 $ 23,281 $ — $ 775,580

Cost of sales 673,842 119 — 673,961

Gross profit 78,457 23,162 — 101,619

Other operating expenses (b)

61,719 16,749 5,521 83,989

Operating income (loss) $ 16,738 $ 6,413 $ ( 5,521 ) $ 17,630

Specialty Technology Solutions $ 14,294 $ 14,580 $ 45,110 $ 51,914

Intelisys & Advisory 8,320 7,489 21,173 22,411

Corporate (a)

( 275 ) ( 4,527 ) ( 7,870 ) ( 5,871 )

Other Segment Items

Depreciation and amortization (c)

$ 4,626 $ 2,125 $ 720 $ 7,471

Capital expenditures $ ( 2,228 ) $ ( 147 ) $ — $ ( 2,375 )

Specialty Technology Solutions $ ( 1,329 ) $ ( 2,384 ) $ ( 5,423 ) $ ( 7,220 )

Intelisys & Advisory ( 91 ) ( 36 ) ( 346 ) ( 65 )

$ ( 1,420 ) $ ( 2,420 ) $ ( 5,769 ) $ ( 7,285 )

(a) For the quarter ended September 30, 2025, the amount in Other operating expenses unallocated to the segments include restructuring expense, acquisition and divestiture, cyberattack restoration costs, as well as legal settlement.

For the quarter ended September 30, 2024, the amount in Other operating expenses unallocated to the segments includes acquisition and divestiture costs, as well as cyberattack restoration costs.

(b) Primarily includes payroll and other employee expenses and other selling and general administrative expenses

(d) Change in fair value of contingent consideration is included within Other operating expenses

Quarter ended

September 30,

(in thousands)

Sales by Geography Category:

United States and Canada $ 657,598 $ 672,662 $ 2,063,467 $ 2,262,707

47,883 81,353 171,830 256,067

United States $ 683,094 $ 715,989

Brazil 57,433 63,561

Less intercompany sales ( 877 ) ( 3,970 )

Net sales (a)

$ 739,650 $ 775,580

(a) For the quarter and nine months ended March 31, 2025, the amounts shown above include restructuring expense, acquisition and divestiture, cyberattack restoration costs as well as legal settlement.

For the quarter and nine months ended March 31, 2024, the amounts above include acquisition and divestiture costs as well as cyberattack restoration costs.

(b) Countries outside of Brazil represent $ 0.1 million, or 0.2 % of sales, and $ 0.3 million or 0.2 % of sales, for the quarter and nine months ended March 31, 2025.

Countries outside of Brazil represent $ 0.1 million, or 0.2 % of sales, and $ 4.3 million, or 1.7 % of sales, for the quarter and nine months ended March 31, 2024.

March 31, 2025 June 30, 2024

(a) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters ended September 30, 2025 and 2024.

September 30, 2025 June 30, 2025

(in thousands)

3 unchanged sentences

Property and equipment, net by Geography Category:

United States and Canada $ 16,246 $ 21,613

United States $ 14,685 $ 15,047

Brazil 17,536 16,122

7 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, 2025 and the consolidated financial statements at June 30, 2024.

The gross amount of the balances recorded related to finance leases is immaterial to the condensed consolidated financial statements at September 30, 2025 and the consolidated financial statements at June 30, 2025.

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 under ASC 842 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, 2025 and June 30, 2024:

March 31, 2025 June 30, 2024

The following table presents amounts recorded on the Condensed Consolidated Balance Sheets related to operating leases at September 30, 2025 and June 30, 2025:

September 30, 2025 June 30, 2025

Operating leases Balance Sheet location (in thousands)

2 unchanged sentences

Long-term operating lease liabilities Other long-term liabilities $ 7,139 $ 6,972

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, 2025 and 2024.

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,

2025 2024 2025 2024

Quarter ended September 30,

(in thousands)

2 unchanged sentences

$ 1,590 $ 1,453

Supplemental cash flow information related to the Company's operating leases for the nine months ended March 31, 2025 and 2024 are presented in the table below:

Nine months ended March 31,

Supplemental cash flow information related to the Company's operating leases for the three months ended September 30, 2025 and 2024 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 1,385 2,461

The weighted-average remaining lease term and discount rate at March 31, 2025 are presented in the table below:

March 31, 2025

The weighted-average remaining lease term and discount rate at September 30, 2025 are presented in the table below:

September 30, 2025

Weighted-average remaining lease term 3.11 years

Weighted-average discount rate 6.40 %

The following table presents the maturities of the Company's operating lease liabilities at March 31, 2025:

The following table presents the maturities of the Company's operating lease liabilities at September 30, 2025:

Operating leases

(in thousands)

Thereafter 603

Total future payments 13,154

4 unchanged sentences

Although there can be no assurance, based upon information known to the Company, the Company believes that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

During the Company's due diligence for the Network1 acquisition completed in 2016, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures.

During the Company's due diligence for the Network1 acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures.

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 $ 3.2 million at March 31, 2025 and June 30, 2024.

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, 2025 and June 30, 2024:

March 31, 2025 June 30, 2024

(in thousands)

Prepaid expenses and other current assets $ 14 $ 14

Other non-current assets $ 3,483 $ 3,598

Accrued expenses and other current liabilities $ 14 $ 14

Other long-term liabilities $ 3,483 $ 3,598

There were no deposits or releases from the escrow account during the quarter ended September 30, 2025.

During the fiscal year ended June 30, 2025, there were no deposits into the escrow account;

however $ 0.2 million was released from the escrow account.

The amount available after the impact of foreign currency translation, as of September 30, 2025 and June 30, 2025, for future pre-acquisition contingency settlements or to be released to the sellers was $ 3.6 million and $ 3.4 million, respectively.

The Company has recorded pre-acquisition contingencies and corresponding indemnification receivables related to Network1 of $ 3.8 million and $ 3.7 million at September 30, 2025 and June 30, 2025 , respectively.

These balances are presented as other non-current liabilities and other non-current assets in the Consolidated Balance Sheets.

The amount of reasonably possible undiscounted pre-acquisition contingencies as of September 30, 2025 is estimated to range from $ 3.8 million to $ 15.3 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

(13) Income Taxes

Income taxes for the quarters and nine months ended March 31, 2025 and 2024 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, 2025 and 2024 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, 2025, there were no material discrete items.

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 28.0 % and 23.1 % for the quarter and nine months ended March 31, 2025, respectively, 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 28.7 % and 21.0 % for the quarter and nine months ended March 31, 2024, respectively.

As of March 31, 2025, the Company is not permanently reinvested with respect to all earnings generated by foreign operations.

There were no material discrete items recorded during the quarter ended September 30, 2025.

A discrete net tax benefit of $ 0.8 million related to stock compensation was recorded during the quarter ended September 30, 2024.

The Company’s effective tax rate of 26.4 % for the quarter ended September 30, 2025, differs from the current federal statutory rate of 21% primarily as a result of income derived from tax jurisdictions with varying income tax rates, nondeductible expenses and state income taxes.

The Company's effective tax rate was 26.1 % for the quarter ended September 30, 2024.

As of September 30, 2025, 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 quarter ended March 31, 2025, foreign subsidiaries did not repatriate cash to the United States.

During the quarter ended September 30, 2025, 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 and $ 1.1 million of total gross unrecognized tax benefits at March 31, 2025 and June 30, 2024, respectively.

Of this total at March 31, 2025, 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 had approximately $ 0.7 million of total gross unrecognized tax benefits at September 30, 2025 and June 30, 2025, respectively.

Of this total at September 30, 2025, approximately $ 0.6 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, 2025 and June 30, 2024, the Company had approximately $ 1.3 million accrued for interest and penalties.

At September 30, 2025 and June 30, 2025, the Company had approximately $ 1.0 million accrued for interest and penalties.

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

5 unchanged sentences

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, most of which is expected to be realized during this fiscal year.

The following table presents the restructuring and employee separation costs incurred for the quarter and nine months ended March 31, 2025:

Quarter ended Nine months ended

March 31, 2025 March 31, 2025

(in thousands)

Employee separation and benefit costs $ — 5,381

For the quarter and nine months ended March 31, 2025, 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, 2025:

The following table represents activity for the three months ended September 30, 2025:

Accrued Expenses

1 unchanged sentence

Balance at June 30, 2025

Charged to expense 5,381

Cash payments ( 404 )

Balance at March 31, 2025

The remaining balance as of March 31, 2025 of $ 1.3 million is expected to be paid through the third quarter of fiscal year 2026.

Balance at September 30, 2025

The remaining balance as of September 30, 2025 of $ 0.2 million is expected to be paid through the third quarter of fiscal year 2026.

(15) Business Acquisitions

11 unchanged sentences

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

The Company recognized $ 0.2 million and $ 0.8 million for the quarter and nine months ended March 31, 2025, respectively, 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.

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.

During the quarter ended December 31, 2024, $ 2.6 million in cash was released from escrow related to the sale of intY.

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

The Company continues to evaluate acquisitions on an on-going basis and has recognized $ 0.3 million and $ 0.4 million in acquisition-related costs for the quarters ended September 30, 2025 and September 30, 2024, respectively.

Acquisition-related costs are included in selling, general and administrative expenses on the Condensed Consolidated Income Statements.

(16) Subsequent Events

On October 20, 2025, ScanSource completed the acquisition of DataXoom, a leading connectivity provider dedicated to supporting purpose-built mobile deployments across our current supplier line card and beyond.

DataXoom complements our Advantix investment and adds 17 employees through the acquisition.

This acquisition will be included in the Specialty Technology Solutions segment in future periods.

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