What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-05-08 · 120 added, 297 removed, 276 unchanged (60% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ScanSource is a leading hybrid distributor connecting devices to the cloud and accelerating growth for customers and 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.

We operate our business under a management structure that enhances our specialty technology focus and hybrid distribution growth strategy.

Our segments operate in the United States, Canada and Brazil and are based on sales models:

ScanSource is a leading technology distributor connecting devices to the cloud and accelerating growth for channel sales partners across hardware, SaaS, connectivity and cloud.

We provide technology solutions and services from approximately 500 leading suppliers of mobility and barcode, POS, payment terminals, physical security, networking, communications, connectivity and cloud services to our approximately 25,000 channel sales partners located primarily in the United States and Brazil.

We operate our business under a management structure that enhances our technology distribution growth strategy.

Our segments operate primarily in the United States and Brazil:

• Specialty Technology Solutions

• Intelisys & Advisory

We offer hardware, SaaS, and connectivity and cloud services from leading technology suppliers to customers and channel partners enabling solutions for users' needs and challenges.

We operate distribution facilities that support our United States and Canada business in Mississippi, California and Kentucky.

We sell hardware, SaaS, connectivity and cloud solutions and services to channel sales partners that are designed to solve end users’ challenges.

We operate distribution facilities that primarily support our United States business in Mississippi, California and Kentucky.

Brazil distribution facilities are located in the Brazilian states of Paraná, Espirito Santo and Santa Catarina.

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announced a variety of additional tariffs on goods from multiple nations and trading blocks and has been targeted with reciprocal tariffs and other retaliatory actions in response.

Although the U.S.

has announced a 90-day pause on certain tariffs, negotiations and the state of international trade policy and relations continue to evolve.

We are mindful of the potential impact these conditions could have on our customers, suppliers and end-customer demand and w e are actively monitoring changes to the global macroeconomic environment and assessing the potential impacts these challenges may have on our financial condition, results of operations and liquidity.

We expect to pass any price increases from our suppliers resulting from tariffs to our customers.

Negotiations and the state of international trade policy and relations continue to evolve.

We are mindful of the potential impact these conditions could have on our channel sales partners, suppliers and end-user demand and w e are actively monitoring changes to the global macroeconomic environment and assessing the potential impacts these challenges may have on our financial condition, results of operations and liquidity.

We expect to pass any price increases from our suppliers resulting from tariffs to our channel sales partners.

W e are also mitigating risks through strategic planning and maintaining financial flexibility , but we cannot predict the outcome of our mitigation strategies or the ultimate impact of tariffs and the global macroeconomic environment on our financial condition or results of operations .

Business Acquisitions

On August 8, 2024, we completed the acquisition of substantially all of the assets of Secure Path Networks, LLC doing business as Resourcive ("Resourcive"), a leading technology advisor.

Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses.

On August 15, 2024, we completed the acquisition of substantially all of the assets of Advantix Solutions Group, Inc.

("Advantix"), a managed connectivity experience provider specializing in wireless enablement solutions.

Restructuring

In September 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 $10.5 million in annualized savings in selling, general and administrative expenses.

Our strategy is to drive sustainable, profitable growth by orchestrating hybrid technology solutions through a growing ecosystem of partners by leveraging our people, processes and tools.

Our goal is to provide exceptional experiences for our customers, suppliers and employees through operational excellence.

Our hybrid distribution strategy utilizes multiple sales models to offer hardware, SaaS, and connectivity and cloud services from leading technology suppliers to customers that solve end-users’ challenges.

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

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

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

On July 4, 2025, the One Big Beautiful Bill Act (the “ Act ” ) was signed into law.

The Act permanently extends key provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation, and introduces changes to the international tax framework.

We are currently assessing the impact of the Act on our future effective tax rate, tax liabilities, and cash taxes.

Our strategy is to drive sustainable, profitable growth by providing complex, converging technology solutions through a growing ecosystem of channel sales partners leveraging our people, processes and tools.

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

Our differentiated technology distribution strategy utilizes multiple sales models to offer hardware, SaaS, connectivity and cloud services from leading technology suppliers to channel sales partners that solve end users’ challenges.

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

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

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

Results of Operations

We have two reportable segments, which are based on sales channels.

The following tables summarize our net sales results by operating segment and by geographic location for the quarters and nine months ended March 31, 2025 and 2024:

Quarter ended March 31, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

The following tables summarize our net sales results by operating segment and by geographic location for the quarters ended September 30, 2025 and 2024:

Quarter ended September 30, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

Net Sales by Segment:

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Total net sales $ 739,650 $ 775,580 $ (35,930) (4.6) % (5.4) %

Nine months ended March 31, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

2025 2024 $ Change % Change

(in thousands)

Specialty Technology Solutions $ 2,154,009 $ 2,445,298 $ (291,289) (11.9) % (11.3) %

Intelisys & Advisory 73,915 68,398 5,517 8.1 % 0.9 %

Total net sales $ 2,227,924 $ 2,513,696 $ (285,772) (11.4) % (11.0) %

(a) A reconciliation of non-GAAP net sales in constant currency, excluding divestitures and acquisitions, is presented at the end of Results of Operations , under Non-GAAP Financial Information.

Specialty Technology Solutions

The Specialty Technology Solutions segment consists of sales to channel partners in the United States, Canada and Brazil.

For the quarter and nine months ended March 31, 2025, net sales decreased $51.4 million, or 7.0%, and $291.3 million, or 11.9%, respectively, compared to the prior-year periods.

Excluding the impact from foreign exchange rate fluctuations and the impact of divestitures and acquisitions, adjusted net sales decreased $49.4 million , or 6.8%, and $276.3 million, or 11.3%, respectively, compared to the prior-year periods.

For the quarter e nded March 31, 2025, net sales decreased primarily due to lower net sales in Brazil.

In North America, most of the technologies in this segment had year-over-year growth.

For the nine months ended March 31, 2025, net sales decreased primarily due to soft demand in a more cautious technology spending environment.

The Specialty Technology Solutions segment consists of sales to channel partners primarily in the United States and Brazil.

For the quarter ended September 30, 2025, net sales decreased $36.9 million, or 4.9%, compared to the prior-year period.

Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales decreased $41.6 million , or 5.6%, compared to the prior-year period.

For the quarter e nded September 30, 2025, net sales decreased primarily due to lower large deals.

Intelisys & Advisory

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

For the quarter ended March 31, 2025, net sales increased $3.6 million, or 16.0%, compared to the prior-year period.

Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $1.0 million, or 4.3% for the quarter ended March 31, 2025.

For the nine months ended March 31, 2025, net sales increased $5.5 million, or 8.1%, compared to the prior-year period.

Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $0.6 million, or 0.9% for the nine months ende d March 31, 2025.

The increase in net sales for the quarter and nine months ended March 31, 2025 reflects the addition of an acquisition and Intelisys net sales growth.

Quarterly net billings for Intelisys increased 6.8% over the prior-year quarter to bring annualized net billings to approximately $2.86 billion.

Quarter ended March 31, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

For the quarter ended September 30, 2025, net sales increased $0.9 million, or 4.0%, compared to the prior-year period.

The increase in net sales reflects the addition of an acquisition.

Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $0.2 million, or 0.7% for the quarter ended September 30, 2025.

The increase in net sales for the quarter ended September 30, 2025 reflects Intelisys net sales growth.

Quarterly net billings for Intelisys inc reased 1.7% o ver the prior-year quarter to bring annualized net billings to approximately $2.78 billion.

Quarter ended September 30, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

Net Sales by Geography:

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(in thousands)

United States and Canada $ 656,964 $ 671,246 $ (14,282) (2.1) % (3.5) %

47,883 81,353 (33,470) (41.1) % (30.4) %

Total net sales $ 704,847 $ 752,599 $ (47,752) (6.3) % (6.4) %

Nine months ended March 31, % Change, Constant Currency, Excluding Divestitures and Acquisitions (a)

2025 2024 $ Change % Change

(in thousands)

United States and Canada $ 2,056,094 $ 2,257,629 $ (201,535) (8.9) % (9.9) %

United States $ 682,217 $ 712,019 $ (29,802) (4.2) % (4.8) %

Brazil 57,433 63,561 (6,128) (9.6) % (11.4) %

Total net sales (b)

$ 739,650 $ 775,580 $ (35,930) (4.6) % (5.4) %

Total net sales $ 2,227,924 $ 2,513,696 $ (285,772) (11.4) % (11.0) %

(a) A reconciliation of non-GAAP net sales in constant currency is presented at the end of Results of Operations in the non-GAAP section.

(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, respectively.

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, respectively.

The following table summarizes our gross profit for the quarters and nine months ended March 31, 2025 and 2024:

Quarter ended March 31, % of Net Sales March 31,

2025 2024 $ Change % Change 2025 2024

(in thousands)

Specialty Technology Solutions $ 73,994 $ 71,840 $ 2,154 3.0 % 10.9 % 9.8 %

Intelisys & Advisory 26,208 22,641 3,567 15.8 % 99.2 % 99.5 %

Gross profit $ 100,202 $ 94,481 $ 5,721 6.1 % 14.2 % 12.6 %

Nine months ended March 31, % of Net Sales March 31,

(b) 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.

The following table summarizes our gross profit for the quarters ended September 30, 2025 and 2024:

Quarter ended September 30, % of Net Sales September 30,

2025 2024 $ Change % Change 2025 2024

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Our gross profit is primarily affected by sales volume and gross margin mix.

Gross margin mix is impacted by multiple factors, which include sales mix (proportion of sales of higher margin products or services relative to total sales), vendor program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs.

Increases in vendor program recognition decrease cost of goods sold, thereby increasing gross profit.

Gross margin mix is impacted by multiple factors, which include sales mix (proportion of sales of higher margin products or services relative to total sales), supplier program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs.

Increases in supplier program recognition decrease cost of goods sold, thereby increasing gross profit.

Net sales derived from our Intelisys business contribute 100% to our gross profit dollars and margin as they have no associated cost of goods sold.

Specialty Technology Solutions

For the quarter ended March 31, 2025, gross profit dollars for the Specialty Technology Solutions segment increased $2.2 million, or 3.0%, compared to the prior-year quarter.

Vendor program recognition positively impacted gross profit by $7.2 million, offsetting the impact of lower sales volumes of $5.0 million.

For the quarter ended September 30, 2025, gross profit dollars for the Specialty Technology Solutions segment increased $5.4 million, or 6.9%, compared to the prior-year quarter.

Favorable supplier program recognition and sales mix positively impacted gross profit by $9.2 million.

Lower sales volume, after considering cost of goods sold, reduced gross profit by $3.8 million for the quarter.

Gross profit margin increased 130 basis points over the prior-year quarter to 11.7%.

For the nine months ended March 31, 2025, gross profit dollars decreased $3.5 million, or 1.5%, compared to the prior-year period.

Lower sales volume reduced gross profit dollars by $27.8 million.

Gross margin mix positively impacted gross profit by $24.3 million largely due to higher vendor program recognition and a more favorable sales mix.

Gross profit margin increased 113 basis points year-over-year to 10.7%.

Intelisys & Advisory

For the quarter ended March 31, 2025, gross profit dollars for the Intelisys & Advisory segment increased $3.6 million, or 15.8%, compared to the prior-year quarter.

For the quarter ended September 30, 2025, gross profit dollars for the Intelisys & Advisory segment increased $0.4 million, or 1.8%, compared to the prior-year quarter.

Higher sales volume, largely due to the impact of our Resourcive acquisition , increased gross profit for the quarter.

Gross profit margin decreased 211 basis points compared to the prior-year quarter to 97.4%, reflecting the addition of professional services to the sales mix.

For the nine months ended March 31, 2025, gross profit dollars increased $5.3 million, or 7.8%, compared to the prior-year period.

Higher sales volume, largely due to the acquisition of Resourcive, increased gross profit for the nine-month period.

Gross profit margin decreased 27 basis points compared to the prior-year nine-month period to 99.2%, reflecting the addition of professional services to the sales mix.

Operating Expenses

The following table summarizes our operating expenses for the quarters and nine months ended March 31, 2025 and 2024:

Quarter ended March 31, % of Net Sales March 31,

2025 2024 $ Change % Change 2025 2024

(in thousands)

Selling, general and administrative expenses $ 69,698 $ 66,574 $ 3,124 4.7 % 9.9 % 8.8 %

Depreciation expense 2,320 2,690 (370) (13.8) % 0.3 % 0.4 %

Intangible amortization expense 4,941 3,752 1,189 31.7 % 0.7 % 0.5 %

Restructuring and other charges — 3,923 (3,923) (100.0) % 0.0 % 0.5 %

Change in fair value of contingent consideration 904 — 904 *nm 0.1 % 0.0 %

Operating expenses $ 77,863 $ 76,939 $ 924 1.2 % 11.0 % 10.2 %

Nine months ended March 31, % of Net Sales March 31,

The following table summarizes our operating expenses for the quarters ended September 30, 2025 and 2024:

Quarter ended September 30, % of Net Sales September 30,

2025 2024 $ Change % Change 2025 2024

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Operating expenses $ 81,570 $ 83,989 $ (2,419) (2.9) % 11.0 % 10.8 %

Selling, general and administrative expenses (“SG&A”) increased by $3.1 million, or 4.7%, and $6.4 million, or 3.1% for the quarter and nine months ended March 31, 2025, respectively compared to the prior-year periods.

The increase for the quarter is primarily attributable to increased costs related to acquisitions.

The increase for the nine-month period is primarily attributable to increased costs related to acquisitions as well as increased customer specific bad debt expense.

The increase in amortization expense of $1.2 million and $2.3 million during the quarter and nine months ended March 31, 2025, respectively, is largely due to intangible assets acquired in our acquisitions of Advantix and Resourcive.

Restructuring and other charges of $5.4 million were incurred during the nine months ended March 31, 2025 compared to charges of $3.9 million for the quarter and nine months ended March 31, 2024.

Selling, general and administrative expenses (“SG&A”) increased by $3.6 million, or 5.0%, for the quarter ended September 30, 2025, compared to the prior-year period.

The increase for the quarter is primarily attributable to increased costs for employee-related expenses and costs related to acquisitions.

The decrease in depreciation expense of $1.3 million during the quarter ended September 30, 2025, is largely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Restructuring and other charges of $5.1 million were incurred in the quarter ended September 30, 2024.

Restructuring and other charges relate to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented during the current and prior fiscal year.

We present changes in fair value of the contingent consideration owed to the former shareholders of businesses that we acquire as a separate line item in operating expenses.

We recorded a fair value adjustment expense of $0.9 million and $2.0 million in the quarter and nine months ended March 31, 2025, respectively.

The expense from changes in fair value of contingent consideration for the quarter and nine months is largely due to the recurring amortization of the unrecognized fair value discount.

Operating Income

The following table summarizes our operating income for the quarters and nine months ended March 31, 2025 and 2024:

Quarter ended March 31, % of Net Sales March 31,

2025 2024 $ Change % Change 2025 2024

(in thousands)

Specialty Technology Solutions $ 14,294 $ 14,580 $ (286) (2.0) % 2.1 % 2.0 %

Intelisys & Advisory 8,320 7,489 831 11.1 % 31.5 % 32.9 %

Corporate (275) (4,527) 4,252 nm* nm* nm*

We recorded a fair value adjustment expense of $0.3 million in the quarter ended September 30, 2025.

The expense from changes in fair value of contingent consideration for the quarter is largely due to the recurring amortization of the unrecognized fair value discount.

Operating Income

Nine months ended March 31, % of Net Sales March 31,

The following table summarizes our operating income for the quarters ended September 30, 2025 and 2024:

Quarter ended September 30, % of Net Sales September 30,

2025 2024 $ Change % Change 2025 2024

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Specialty Technology Solutions

For the Specialty Technology Solutions segment, operating income decreased $0.3 million, or 2.0%, and $6.8 million, or 13.1% for the quarter and nine months ended March 31, 2025 , respectively, compared to the prior-year periods.

Operating margin was 2.1% for the quarter and nine months ended March 31, 2025.

The decrease in operating income for the quarter is primarily due to higher amortization expense related to a recent acquisition.

The decrease in operating income for the nine months is primarily due to lower gross profits from lower sales volumes as well as higher bad debt expense.

For the Specialty Technology Solutions segment, operating income increased $3.6 million, or 21.7%, for the quarter ended September 30, 2025 , compared to the prior-year periods.

Operating margin was 2.8% and 2.2% for the quarters ended September 30, 2025 and September 30, 2024, respectively .

The increase in operating income for the quarter is primarily due to higher gross profits for the quarter.

Intelisys & Advisory

For the Intelisys & Advisory segment, operating income increased $0.8 million, or 11.1%, for the quarter ended March 31, 2025.

Operating margin decreased to 31.5% for the quarter ended March 31, 2025.

The increase in operating income for the quarter ended March 31, 2025 is a result of higher gross profits for the quarter.

For the nine months ended March 31, 2025, operating income decreased $1.2 million, or 5.5%, compared to the prior-year period.

Operating margin decreased to 28.6% for the nine months ended March 31, 2025.

The decrease in operating income for the nine-month period ended March 31, 2025 is primarily driven by expense related to the change in fair value of contingent consideration.

For the quarter and nine months ended March 31, 2025, Corporate operating losses of $0.3 million and $7.9 million, respectively, represent restructuring and acquisition-related costs and a legal settlement incurred during the fiscal year.

For the Intelisys & Advisory segment, operating income decreased $0.6 million, or 9.3%, for the quarter ended September 30, 2025.

Operating margin decreased to 24.0% for the quarter ended September 30, 2025.

The decrease in operating income for the quarter ended September 30, 2025 is primarily driven by higher employee-related expenses during the quarter.

For the quarter ended September 30, 2025, Corporate operating losses of $0.3 million represents acquisition-related costs.

Total Other (Income) Expense

The following table summarizes our total other (income) expense for the quarters and nine months ended March 31, 2025 and 2024:

Quarter ended March 31, % of Net Sales March 31,

The following table summarizes our total other (income) expense for the quarters ended September 30, 2025 and 2024:

Quarter ended September 30, % of Net Sales September 30,

2025 2024 $ Change % Change 2025 2024

5 unchanged sentences

Total other (income) expense, net $ (1,093) $ (5,332) $ 4,239 (79.5) % (0.1) % (0.7) %

Nine months ended March 31, % of Net Sales March 31,

2025 2024 $ Change % Change 2025 2024

(in thousands)

Interest expense $ 5,914 $ 10,947 $ (5,033) (46.0) % 0.3 % 0.4 %

Interest income (8,193) (6,096) (2,097) 34.4 % (0.4) % (0.2) %

Net foreign exchange losses 212 1,632 (1,420) (87.0) % 0.0 % 0.1 %

Gain on sale of business — (14,533) 14,533 nm* — % (0.6) %

Other, net (6,418) (641) (5,777) nm* (0.3) % (0.0) %

Total other (income) expense, net $ (8,485) $ (8,691) $ 206 (2.4) % (0.4) % (0.3) %

*nm - percentages are not meaningful

Interest expense consists primarily of interest incurred on borrowings, non-utilization fees charged on the revolving credit facility and amortization of debt issuance costs.

Interest expense decreased for the quarter and nine months ended March 31, 2025 compared to the prior-year periods, primarily from lower average borrowings on our multi-currency revolving credit facility.

Interest income increased for the quarter and nine months ended March 31, 2025 primarily from interest earned on higher average cash balances in the United States.

Interest expense decreased for the quarter ended September 30, 2025 compared to the prior-year period, primarily from lower average borrowings on our multi-currency revolving credit facility and lower interest rates.

Interest income increased for the quarter ended September 30, 2025 primarily from higher interest income in Brazil.

Net foreign exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign exchange forward contracts gains and losses.

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The costs associated with foreign exchange forward contracts are included in the net foreign exchange losses.

For the quarter and nine months ended March 31, 2025, we recognized a gain of $1.0 million and $6.4 million, respectively, primarily as a result of an insurance recovery in connection with the cybersecurity attack in the fourth quarter of fiscal year 2023.

Other net income decreased for the quarter ended September 30, 2025, as we recognized a $5.1 million gain in the prior-year period related to an insurance recovery in connection with the cybersecurity attack in fiscal year 2023.

Provision for Income Taxes

For the quarter and nine months ended March 31, 2025, income tax expense was $6.8 million and $15.4 million, respectively, reflecting an effective tax rate of 28.0% and 23.1%.

In comparison, for the quarter and nine months ended March 31, 2024, income tax expense was $5.1 million and $16.2 million reflecting an effective tax rate of 28.7% and 21.0%, respectively.

The decrease in the effective tax rate for the quarter is primarily driven by a change in the geographical mix of earnings.

The increase in the effective tax rate for the nine-month period is primarily due to the higher amount of discrete tax benefits recognized in the prior-year period.

For the quarter ended September 30, 2025, income tax expense was $7.1 million reflecting an effective tax rate of 26.4%.

In comparison, for the quarter ended September 30, 2024, income tax expense was $6.0 million reflecting an effective tax rate of 26.1%.

We expect the effective tax rate, excluding discrete items, for fiscal year 2026 to be approximately 27.2% to 28.2%.

21 unchanged sentences

Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period.

The following table summarizes annualized adjusted ROIC for the quarters ended March 31, 2025 and 2024, respectively:

Quarter ended March 31,

The following table summarizes annualized adjusted ROIC for the quarters ended September 30, 2025 and 2024, respectively:

Quarter ended September 30,

Adjusted return on invested capital ratio, annualized (a)

1 unchanged sentence

(a) The annualized EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year.

There were 90 days in the current and 91 days in the prior-year quarter.

There were 92 days in the current and in the prior-year quarter.

The components of this calculation and reconciliation to our financial statements are shown on the following schedule:

Quarter ended March 31,

Quarter ended September 30,

(in thousands)

10 unchanged sentences

Restructuring costs — 5,068

Tax recovery (1,820) (515)

Insurance recovery, net of payments — (4,868)

Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP) $ 38,590 $ 35,666

Quarter ended March 31,

(a) Acquisition and divestiture costs are generally non-deductible for tax purposes.

Quarter ended September 30,

(in thousands)

8 unchanged sentences

Insurance recovery, net of payments — (3,667)

Tax recovery, net (1,201) (1,648)

Average equity 911,556 923,794

13 unchanged sentences

Net Sales by Segment:

Quarter ended March 31,

Quarter ended September 30,

2025 2024 $ Change % Change

16 unchanged sentences

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates.

Calculated by translating the net sales for the quarter ended March 31, 2025 into U.S.

dollars using the average foreign exchange rates for the quarter ended March 31, 2024.

Net Sales by Segment:

Nine months ended March 31,

2025 2024 $ Change % Change

Specialty Technology Solutions (in thousands)

Net sales, reported $ 2,154,009 $ 2,445,298 $ (291,289) (11.9) %

Foreign exchange impact (a)

Divestitures — (4,019)

Acquisitions (17,059) —

Non-GAAP net sales $ 2,165,020 $ 2,441,279 $ (276,259) (11.3) %

Intelisys & Advisory

Net sales, reported $ 73,915 $ 68,398 $ 5,517 8.1 %

Foreign exchange impact (a)

Acquisitions (4,924) —

Non-GAAP net sales $ 68,986 $ 68,398 $ 588 0.9 %

Consolidated:

Net sales, reported $ 2,227,924 $ 2,513,696 $ (285,772) (11.4) %

Foreign exchange impact (a)

Divestitures — (4,019)

Acquisitions (21,983) —

Non-GAAP net sales $ 2,234,006 $ 2,509,677 $ (275,671) (11.0) %

(a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates.

Calculated by translating the net sales for the nine months ended March 31, 2025 into U.S.

dollars using the average foreign exchange rates for the nine months ended March 31, 2024.

Calculated by translating the net sales for the quarter ended September 30, 2025 into U.S.

dollars using the average foreign exchange rates for the quarter ended September 30, 2024.

Net Sales by Geography:

Quarter ended March 31,

Quarter ended September 30,

2025 2024 $ Change % Change

United States and Canada:

United States:

(in thousands)

Net sales, as reported $ 656,964 $ 671,246 $ (14,282) (2.1) %

Acquisitions (9,322) —

Non-GAAP net sales $ 647,642 $ 671,246 $ (23,604) (3.5) %

Net sales, reported (a)

$ 682,217 $ 712,019 $ (29,802) (4.2) %

Foreign exchange impact (b)

Non-GAAP net sales, constant currency $ 56,588 $ 81,353 $ (24,765) (30.4) %

Consolidated:

Net sales, reported (a)

$ 704,847 $ 752,599 $ (47,752) (6.3) %

Foreign exchange impact (b)

Acquisitions (8,507) (4,089)

Non-GAAP net sales, constant currency $ 704,230 $ 752,599 $ (48,369) (6.4) %

(a) Countries outside of Brazil represent $0.1 million, or 0.2% of sales, for the quarter ended March 31, 2025 and $0.1 million, or 0.2% of sales, for the quarter ended March 31, 2024.

(b) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates.

Calculated by translating the net sales for the quarter ended March 31, 2025 into U.S.

dollars using the average foreign exchange rates for the quarter ended March 31, 2024.

Nine months ended March 31,

2025 2024 $ Change % Change

United States and Canada:

(in thousands)

Net sales, as reported $ 2,056,094 $ 2,257,629 $ (201,535) (8.9) %

Acquisitions (21,983) —

Non-GAAP net sales $ 673,710 $ 707,930 $ (34,220) (4.8) %

Net sales, reported (a)

Net sales, reported (b)

$ 57,433 $ 63,561 $ (6,128) (9.6) %

Foreign exchange impact (b)

Divestitures — (4,019)

Foreign exchange impact (c)

Non-GAAP net sales, constant currency $ 56,345 $ 63,561 $ (7,216) (11.4) %

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Net sales, reported

Foreign exchange impact (b)

Divestitures — (4,019)

$ 739,650 $ 775,580 $ (35,930) (4.6) %

Foreign exchange impact (c)

Acquisitions (8,507) (4,089)

Non-GAAP net sales, constant currency $ 730,055 $ 771,491 $ (41,436) (5.4) %

(a) Countries outside of Brazil represent $0.3 million, or 0.2% of sales, for the nine months ended March 31, 2025 and $4.3 million, or 1.7% of sales, for the nine months ended March 31, 2024.

(b) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates.

Calculated by translating the net sales for the nine months ended March 31, 2025 into U.S.

dollars using the average foreign exchange rates for the nine months ended March 31, 2024.

(a) Includes net sales in Canada that are supported by U.S.

operations and represent less than 5.0% of United States net sales for the quarters ended September 30, 2025 and 2024.

(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.2% of Brazil net sales for the quarters ended September 30, 2025 and 2024.

Calculated by translating the net sales for the quarter ended September 30, 2025 into U.S.

dollars using the average foreign exchange rates for the quarter ended September 30, 2024.

Operating Income by Segment:

Quarter ended March 31, % of Net Sales March 31,

Quarter ended September 30, % of Net Sales September 30,

2025 2024 $ Change % Change 2025 2024

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Change in fair value of contingent consideration 145 — 145

Tax recovery, net (1,820) (515) (1,305)

Non-GAAP operating income $ 22,736 $ 19,014 $ 3,722 19.6 % 3.2 % 2.5 %

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Change in fair value of contingent consideration 314 — 314

Tax recovery (a)

(1,820) (515) (1,305)

Acquisition and divestiture costs 261 377 (116)

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Non-GAAP operating income $ 30,911 $ 27,509 $ 3,402 12.4 % 4.2 % 3.5 %

(a) Recovery of prior period withholding taxes in Brazil.

Operating Income by Segment:

Nine months ended March 31, % of Net Sales March 31,

2025 2024 $ Change % Change 2025 2024

Specialty Technology Solutions:

(in thousands)

GAAP operating income $ 45,110 $ 51,914 $ (6,804) (13.1) % 2.1 % 2.1 %

Amortization of intangible assets 7,769 6,224 1,545

Change in fair value of contingent consideration 567 — 567

Tax recovery (a)

(2,570) (1,901) (669)

Non-GAAP operating income $ 50,876 $ 56,237 $ (5,361) (9.5) % 2.4 % 2.3 %

Intelisys & Advisory:

GAAP operating income $ 21,173 $ 22,411 $ (1,238) (5.5) % 28.6 % 32.8 %

Amortization of intangible assets 6,531 5,758 773

Change in fair value of contingent consideration 1,480 — 1,480

Non-GAAP operating income $ 29,184 $ 28,169 $ 1,015 3.6 % 39.5 % 41.2 %

GAAP operating loss $ (7,870) $ (5,871) $ (1,999) nm* nm* nm*

Cyberattack restoration costs 177 733 (556)

Acquisition and divestiture costs 733 1,215 (482)

Restructuring costs 5,381 3,923 1,458

Legal settlement 1,579 — 1,579

Non-GAAP operating income $ — $ — $ — nm* nm* nm*

Consolidated:

GAAP operating income $ 58,413 $ 68,454 $ (10,041) (14.7) % 2.6 % 2.7 %

Amortization of intangible assets 14,300 11,982 2,318

Change in fair value of contingent consideration 2,047 — 2,047

Cyberattack restoration costs 177 733 (556)

Tax recovery (a)

(2,570) (1,901) (669)

Acquisition and divestiture costs 733 1,215 (482)

Restructuring costs 5,381 3,923 1,458

Legal settlement 1,579 — 1,579

Non-GAAP operating income $ 80,060 $ 84,406 $ (4,346) (5.1) % 3.6 % 3.4 %

(a) Recovery of prior period withholding taxes in Brazil.

Additional Non-GAAP Metrics

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Below we provide a non-GAAP reconciliation of the aforementioned metrics adjusted for the costs and charges mentioned above:

Quarter ended March 31, 2025

Quarter ended September 30, 2025

Measure Intangible

expense Change in fair value of contingent consideration Acquisition and Divestiture costs (a)

Restructuring costs Insurance recovery Tax

recovery Cyberattack

Restructuring costs Insurance recovery Cyberattack

restoration costs Non-GAAP

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Diluted EPS $ 0.89 $ 0.15 $ 0.01 $ 0.01 $ — $ — $ — $ 1.06

Quarter ended March 31, 2024

Quarter ended September 30, 2024

Measure Intangible

expense Change in fair value of contingent consideration Acquisition and Divestiture costs (a)

Restructuring costs Insurance recovery Tax

recovery Cyberattack

Restructuring costs Insurance recovery Cyberattack

restoration costs Non-GAAP

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Diluted EPS $ 0.69 $ 0.13 $ — $ 0.02 $ 0.15 $ (0.15) $ — $ 0.84

(a) Acquisition and divestiture costs for the quarters ended March 31, 2025 and 2024 are generally nondeductible for tax purposes.

Nine months ended March 31, 2025

Measure Intangible

expense Change in fair value of contingent consideration Acquisition and Divestiture costs (a)

Restructuring costs Tax

recovery Cyberattack

restoration costs Insurance recovery Legal settlement Non-GAAP

SG&A expenses $ 215,324 $ — $ — $ (733) $ — $ 2,570 $ (177) $ — $ (1,579) $ 215,405

Operating income 58,413 14,300 2,047 733 5,381 (2,570) 177 — 1,579 80,060

Pre-tax income 66,898 14,300 2,047 733 5,381 (2,570) 177 (5,624) 1,579 82,921

Net income 51,458 10,709 1,542 733 4,054 (3,761) 133 (4,237) 1,189 61,820

Diluted EPS $ 2.13 $ 0.44 $ 0.06 $ 0.03 $ 0.17 $ (0.16) $ 0.01 $ (0.18) $ 0.05 $ 2.56

Nine months ended March 31, 2024

Measure Intangible

expense Change in fair value of contingent consideration Acquisition and Divestiture costs (a)

Restructuring costs Tax

recovery Cyberattack

restoration costs Insurance recovery Gain on

a business (b)

SG&A expenses $ 208,930 $ — $ — $ (1,215) $ (3,923) $ 1,901 $ (733) $ — $ — $ 204,960

Operating income 68,454 11,982 — 1,215 3,923 (1,901) 733 — — 84,406

Pre-tax income 77,145 11,982 — 1,215 3,923 (1,901) 733 — (14,533) 78,564

Net income 60,964 8,909 — 1,215 2,935 (2,288) 548 — (14,533) 57,750

Diluted EPS $ 2.41 $ 0.35 $ — $ 0.05 $ 0.12 $ (0.09) $ 0.02 $ — $ (0.57) $ 2.28

(a) Acquisition and divestiture costs for the nine months ended March 31, 2025 and 2024 are generally nondeductible for tax purposes.

(b) Reflects gain on the sale of the UK-based intY business.

This transaction resulted in a capital loss for tax purposes.

The Company did not record a tax provision on the capital loss since there were no offsetting capital gains.

(a) Acquisition and divestiture costs for the quarters ended September 30, 2025 and 2024 are generally nondeductible for tax purposes.

Liquidity and Capital Resources

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Conversely, when sales volume decreases, our net investment in working capital typically decreases, which typically results in increased cash flow from operating activities.

Our cash and cash equivalents balance totaled $146.3 million at March 31, 2025, compared to $185.5 million at June 30, 2024, including $33.3 million and $20.0 million held outside of the United States at March 31, 2025 and June 30, 2024, respectively.

Checks released but not yet cleared in the amount of $0.2 million and $5.9 million are included in accounts payable at March 31, 2025 and June 30, 2024, respectively.

We conduct business primarily in the United States, Canada and Brazil where we generate and use cash.

Our cash and cash equivalents balance totaled $124.9 million at September 30, 2025, compared to $126.2 million at June 30, 2025, including $43.2 million and $46.3 million held outside of the United States at September 30, 2025 and June 30, 2025, respectively.

Checks released but not yet cleared in the amount of $0.1 million are included in accounts payable at September 30, 2025 and June 30, 2025.

We conduct business primarily in the United States and Brazil where we generate and use cash.

We provide for United States income taxes from the earnings of our Canadian and Brazilian subsidiaries.

See Note 13 - Income Taxes in the Notes to the Consolidated Financial Statements for further discussion.

Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $7.9 million to $498.3 million at March 31, 2025 from $506.2 million at June 30, 2024, primarily from decreases in inventory and accounts receivable, partially offset by lower accounts payable, as a result of lower sales volume and our focus on working capital efficiency.

Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from customers, increases and decreases to inventory levels and payments to vendors.

Nine months ended

Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, increased $12.1 million to $532.8 million at September 30, 2025 from $520.7 million at June 30, 2025, primarily from decreases in accounts payable and increases in inventories, partially offset by lower accounts receivable as a result of lower sales volume.

Our net investment in working capital is affected by several factors such as fluctuations in sales volume, net income, timing of collections from channel sales partners, increases and decreases to inventory levels and payments to vendors.

Three months ended

September 30,

(in thousands)

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Operating cash flows are subject to variability period over period as a result of the timing of payments related to accounts receivable, accounts payable, and other working capital items.

Net cash provided by operating activities was $104.7 million and $316.9 million for the nine months ended March 31, 2025 and March 31, 2024, respectively .

Cash provided by operating activities for the nine months ended March 31, 2025 is primarily attributable to net income adjusted for non-cash items plus reductions in accounts receivable and inventory partially offset by a reduction in accounts payable.

Compared to March 31, 2024 , accounts receivable and inventory decreased 4.6% and 10.0% respectively, while accounts payable decreased 2.7%.

The number of days sales outstanding ("DSO") was 72 days at March 31, 2025 and 71 days at March 31, 2024.

Inventory turned 5.0 times during the quarter ended March 31, 2025, compared to 4.8 times in the prior-year quarter ended March 31, 2024.

Cash used in investing activities for the nine months ended March 31, 2025 was $59.9 million, compared to cash provided by investing activities of $10.7 million in the prior-year period.

Cash used in investing activities for the nine months ended March 31, 2025 is largely due to cash paid for acquisitions and capital expenditures.

Cash provided by investing activities for the nine months ended March 31, 2024 represents the proceeds from the sale of a business offset by capital expenditures.

Management expects capital expenditures for fiscal year 2025 to range from $7.0 million to $9.0 million, primarily for IT investments.

For the nine months ended March 31, 2025 and March 31, 2024 , cash used in financing activities totaled $83.4 million and $203.9 million, respectively.

Cash used in financing activities for the nine months ended March 31, 2025 is primarily attributable to common stock repurchases in the nine months.

Cash used in financing activities for the nine months ended March 31, 2024 is primarily attributable to repayments of borrowings on the revolving credit facility.

Net cash provided by operating activities was $23.2 million and $44.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively .

Cash provided by operating activities for the three months ended September 30, 2025 is primarily attributable to net income and changes in working capital balances.

Compared to September 30, 2024 , accounts receivable and accounts payable decreased 1.8% and 8.5% respectively, while inventory increased 0.3%.

The number of days sales outstanding ("DSO") was 68 days at September 30, 2025, compared to 70 days at June 30, 2025 and 66 days at September 30, 2024.

Inventory turned 5.1 times during the quarter ended September 30, 2025, compared to 5.9 times during the quarter ended June 30, 2025 and 5.3 times in the prior-year quarter ended September 30, 2024.

Cash used in investing activities for the three months ended September 30, 2025 was $2.4 million, compared to cash used by investing activities of $59.2 million in the prior-year period.

Cash used in investing activities for the three months ended September 30, 2025 is due to capital expenditures.

Cash used by investing activities for the three months ended September 30, 2024 represents cash paid for acquisitions and capital expenditures.

Management expects capital expenditures for fiscal year 2026 to range from $10.0 million to $15.0 million, primarily for IT and warehouse investments.

For the three months ended September 30, 2025 and September 30, 2024 , cash used in financing activities totaled $23.0 million and $26.6 million, respectively.

Cash used in financing activities for the three months ended September 30, 2025 and September 30, 2024 is primarily attributable to common stock repurchases.

Credit Facility

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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 our leverage ratio plus, if applicable, certain mandatory costs.

During the quarter and nine months ended March 31, 2025, our borrowings under the Amended Credit Agreement were U.S.

During the quarter ended September 30, 2025, our borrowings under the Amended Credit Agreement were U.S.

dollar loans.

The spread in effect as of March 31, 2025 was 1.00% 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 spread in effect as of September 30, 2025 was 1.00% 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 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.

We were in compliance with all covenants under the credit facility 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 w as $0.3 million and $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.

We were in compliance with all covenants under the credit facility 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 w as $1.1 million and $0.1 million, respectively.

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

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.

Availability to use this borrowing capacity depends upon, among other things, the levels of our Leverage Ratio and Interest Coverage Ratio, which, in turn, will depend upon (1) our Credit Facility Net Debt relative to our Credit Facility EBITDA and (2) Credit Facility EBITDA relative to total interest expense, respectively.

As a result, our availability will increase if EBITDA increases (subject to the limit of the facility) and decrease if EBITDA decreases.

While we were in compliance with the financial covenants contained in the Amended Credit Agreement as of March 31, 2025, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Amended Credit Agreement lending group has been strong and we anticipate their continued support of our long-term business.

While we were in compliance with the financial covenants contained in the Amended Credit Agreement as of September 30, 2025, and currently expect to continue to maintain such compliance, should we encounter difficulties, our historical relationship with our Amended Credit Agreement lending group has been strong and we anticipate their continued support of our long-term business.

We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities, supplemented as necessary with funds under our credit agreements, will provide sufficient resources to meet our present and future working capital and cash requirements for at least the next twelve months.

11 unchanged sentences

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 2. Management’s Discussion and Analysis