SCANSOURCE, INC. 10-Q

Item 1. Financial Statements SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share information) September 30, 2025 June 30, 2025 Assets Current assets: Cash and cash equivalents $ 124,924 $ 126,157 Accounts receivable, less allowance of $ 29,226 at September 30, 2025 and $ 27,821 at June 30, 2025 557,071 635,521 Inventories 505,339 483,815 Prepaid expenses and other current assets 120,001 124,959 Total current assets 1,307,335 1,370,452 Property and equipment, net 32,221 31,169 Goodwill 231,132 230,820 Identifiable intangible assets, net 58,510 62,909 Deferred income taxes 16,715 18,769 Other non-current assets 71,063 71,487 Total assets $ 1,716,976 $ 1,785,606 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 529,578 $ 598,595 Accrued expenses and other current liabilities 63,373 71,263 Current portion of contingent consideration 1,784 1,318 Income taxes payable 3,557 3,927 Current portion of long-term debt 7,866 7,861 Total current liabilities 606,158 682,964 Long-term debt, net of current portion 126,047 128,288 Long-term portion of contingent consideration 16,255 17,782 Other long-term liabilities 54,484 50,163 Total liabilities 802,944 879,197 Commitments and contingencies Shareholders’ equity: Preferred stock, no par value; 3,000,000 shares authorized, none issued — — Common stock, no par value; 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 Accumulated other comprehensive loss ( 110,688 ) ( 114,424 ) Total shareholders’ equity 914,032 906,409 Total liabilities and shareholders’ equity $ 1,716,976 $ 1,785,606 June 30, 2025 amounts are derived from audited consolidated financial statements. See accompanying notes to these condensed consolidated financial statements. 5 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) (In thousands, except per share data) Quarter ended September 30, 2025 2024 Net sales $ 739,650 $ 775,580 Cost of goods sold 632,177 673,961 Gross profit 107,473 101,619 Selling, general and administrative expenses 75,275 71,706 Depreciation expense 1,577 2,857 Intangible amortization expense 4,404 4,358 Restructuring expense — 5,068 Change in fair value of contingent consideration 314 — Operating income 25,903 17,630 Interest expense 1,914 2,109 Interest income ( 3,180 ) ( 2,659 ) Other (income) expense, net 173 ( 4,782 ) Income before income taxes 26,996 22,962 Provision for income taxes 7,118 5,988 Net income $ 19,878 $ 16,974 Per share data: Net income per common share, basic $ 0.90 $ 0.70 Weighted-average shares outstanding, basic 22,018 24,147 Net income per common share, diluted $ 0.89 $ 0.69 Weighted-average shares outstanding, diluted 22,405 24,646 See accompanying notes to these condensed consolidated financial statements. 6 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands) Quarter ended September 30, 2025 2024 Net income $ 19,878 $ 16,974 Unrealized loss on hedged transaction, net of tax ( 230 ) ( 1,050 ) Foreign currency translation adjustment 3,966 4,109 Comprehensive income $ 23,614 $ 20,033 See accompanying notes to these condensed consolidated financial statements. 7 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (In thousands, except share information) Common Stock (Shares) Common Stock (Amount) Retained Earnings Accumulated Other Comprehensive Loss Total Balance at June 30, 2025 22,217,421 $ — $ 1,020,833 $ ( 114,424 ) $ 906,409 Net income — — 19,878 — 19,878 Unrealized loss on hedged transaction, net of tax — — — ( 230 ) ( 230 ) Foreign currency translation adjustment — — — 3,966 3,966 Exercise of stock options and shares issued under share-based compensation plans, net of shares withheld for employee taxes 339,444 2,218 — — 2,218 Common stock repurchased, including excise tax ( 489,737 ) ( 5,094 ) ( 15,991 ) — ( 21,085 ) Share-based compensation — 2,876 — — 2,876 Balance at September 30, 2025 22,067,128 $ — $ 1,024,720 $ ( 110,688 ) $ 914,032 See accompanying notes to these condensed consolidated financial statements. 8 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (In thousands, except share information) Common Stock (Shares) Common Stock (Amount) Retained Earnings Accumulated Other Comprehensive Loss Total Balance at June 30, 2024 24,243,848 $ 26,370 $ 1,013,738 $ ( 115,853 ) $ 924,255 Net income — — 16,974 — 16,974 Unrealized loss on hedged transaction, net of tax — — — ( 1,050 ) ( 1,050 ) Foreign currency translation adjustment — — — 4,109 4,109 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 Common stock repurchased, including excise tax ( 588,018 ) ( 28,043 ) — — ( 28,043 ) Share-based compensation — 2,471 — — 2,471 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. 9 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three months ended September 30, 2025 2024 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: Depreciation and amortization 6,200 7,471 Amortization of debt issue costs 96 96 Provision for doubtful accounts 1,928 1,678 Share-based compensation 2,876 2,471 Deferred income taxes 2,079 2,433 Change in fair value of contingent consideration 314 — Finance lease interest 15 25 Changes in operating assets and liabilities: Accounts receivable 79,010 20,606 Inventories ( 20,574 ) 9,524 Prepaid expenses and other assets 5,262 ( 1,952 ) Other non-current assets 552 3,285 Accounts payable ( 70,297 ) ( 17,002 ) Accrued expenses and other liabilities ( 3,758 ) 744 Income taxes payable ( 370 ) ( 1,523 ) Net cash provided by operating activities 23,211 44,830 Cash flows from investing activities: Capital expenditures ( 2,395 ) ( 2,375 ) Cash paid for business acquisitions, net of cash acquired — ( 56,849 ) Net cash used in investing activities ( 2,395 ) ( 59,224 ) Cash flows from financing activities: Borrowings on revolving credit 49,210 8,381 Repayments on revolving credit ( 49,210 ) ( 8,430 ) Repayments on long-term debt ( 2,236 ) ( 357 ) Repayments on finance lease obligation ( 271 ) ( 275 ) Contingent consideration payments ( 1,375 ) — Exercise of stock options 4,834 6,971 Taxes paid on settlement of equity awards ( 2,617 ) ( 4,794 ) Common stock repurchased, including excise tax ( 21,285 ) ( 28,126 ) Net cash used in financing activities ( 22,950 ) ( 26,630 ) Effect of exchange rate changes on cash and cash equivalents 901 608 Decrease in cash and cash equivalents ( 1,233 ) ( 40,416 ) Cash and cash equivalents at beginning of period 126,157 185,460 Cash and cash equivalents at end of period $ 124,924 $ 145,044 See accompanying notes to these condensed consolidated financial statements. 10 Table of Contents SCANSOURCE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Business and Summary of Significant Accounting Policies Business Description ScanSource, Inc. (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 The accompanying unaudited condensed consolidated financial statements of the Company have been prepared by the Company’s management in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information and applicable rules and regulations of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, they do not include all of the information and footnotes required by U.S. 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 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. Summary of Significant Accounting Policies 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. Cash and Cash Equivalents The Company considers all highly-liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company maintains zero-balance disbursement accounts at various financial institutions at which the Company does not maintain significant depository relationships. 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 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. 11 Table of Contents 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 $ 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 $ 4.4 million for the quarters ended September 30, 2025 and September 30, 2024. Recent Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This ASU updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024 and is applicable to the Company’s fiscal year beginning July 1, 2025, 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 November 2024, the FASB issued ASU 2024-03 “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires public entities to disclose specified information about certain costs and expenses. The ASU is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. This ASU is applicable to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 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. 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 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 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. Receivables that do not share risk characteristics are evaluated on an individual basis. Estimates of expected credit losses on trade receivables over the contractual life are recorded at inception and adjusted over the contractual life. 12 Table of Contents 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) 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 three months ended September 30, 2025. (3) Revenue Recognition 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. In determining the appropriate amount of revenue to recognize, the Company applies the following five-step model in accordance with ASC 606: (i) identify contracts with customers; (ii) identify performance obligations in the contracts; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations per the contracts; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company recognizes revenue as control of products and services are transferred to customers, which is generally at the point of shipment. The Company delivers products to customers in several ways, including: (i) shipment from a Company warehouse, (ii) drop-shipment directly from the supplier, or (iii) electronic delivery for non-physical products. Principal versus Agent Considerations The Company is the principal for sales of all hardware and certain software and services. The Company considers itself the principal in those transactions where it has control of the product or service before it is transferred to the customer. The Company recognizes the principal-associated revenue and cost of goods sold on a gross basis. The Company is the agent for third-party service contracts, including product warranties and supplier-hosted software. These service contracts are sold separately from the products, and the Company often serves as the agent for the contract on behalf of the original equipment manufacturer. The Company's responsibility is to arrange for the provision of the specified service by the original equipment manufacturer, and the Company does not control the specified service before it is transferred to the customer. Because the Company acts as an agent, revenue is recognized net of cost at the time of sale. The Intelisys business operates under an agency model. Variable Considerations For certain transactions, products are sold with a right of return and may also provide other rebates or incentives, which are accounted for as variable consideration. The Company estimates a returns allowance based on historical experience and reduces revenue accordingly. The Company estimates the amount of variable consideration for rebates and incentives by using the expected value to be given to the customer and reduces the revenue by those estimated amounts. These estimates are reviewed and updated as necessary at the end of each reporting period. Contract Balances 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. 13 Table of Contents Disaggregation of Revenue The following tables represent the Company's disaggregation of revenue: Quarter ended September 30, 2025 Specialty Technology Solutions Intelisys & Advisory Total (in thousands) Revenue by product/service Products and services $ 701,631 $ 1,353 $ 702,984 Recurring revenue (a) 13,816 22,850 36,666 $ 715,447 $ 24,203 $ 739,650 Quarter ended September 30, 2024 Specialty Technology Solutions Intelisys & Advisory Total (in thousands) Revenue by product/service Products and services $ 740,644 $ 974 $ 741,618 Recurring revenue (a) 11,655 22,307 33,962 $ 752,299 $ 23,281 $ 775,580 (a) Recurring revenue represents revenue primarily from agency commissions, managed connectivity, SaaS, subscriptions, and hardware rentals. (4) Earnings Per Share Basic earnings per share are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per share are computed by dividing net income by the weighted-average number of common and potential common shares outstanding. Quarter ended September 30, 2025 2024 (in thousands, except per share data) Numerator: Net income $ 19,878 $ 16,974 Denominator: Weighted-average shares, basic 22,018 24,147 Dilutive effect of share-based payments 387 499 Weighted-average shares, diluted 22,405 24,646 Net income per common share, basic $ 0.90 $ 0.70 Net income per common share, diluted $ 0.89 $ 0.69 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. 14 Table of Contents (5) Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, net of tax are as follows: September 30, 2025 June 30, 2025 (in thousands) Foreign currency translation adjustment $ ( 110,968 ) $ ( 114,934 ) Unrealized gain on hedged transaction, net of tax 280 510 Accumulated other comprehensive loss $ ( 110,688 ) $ ( 114,424 ) The tax effect of amounts in comprehensive loss reflect a tax benefit as follows: Quarter ended September 30, 2025 2024 (in thousands) Tax benefit $ ( 45 ) $ ( 363 ) (6) Goodwill and Other Identifiable Intangible Assets 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 (in thousands) Balance at June 30, 2025 $ 159,779 $ 71,041 $ 230,820 Foreign currency translation adjustment 317 ( 5 ) 312 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 (in thousands) Balance at June 30, 2025 $ 62,909 Amortization expense ( 4,404 ) Foreign currency translation adjustment 5 Balance at September 30, 2025 $ 58,510 15 Table of Contents (7) Short-Term Borrowings and Long-Term Debt The following table presents the Company’s debt at September 30, 2025 and June 30, 2025. September 30, 2025 June 30, 2025 (in thousands) Current portion of long-term debt $ 7,866 $ 7,861 Mississippi revenue bond, net of current portion 2,297 2,663 Senior secured term loan facility, net of current portion 123,750 125,625 Borrowings under revolving credit facility — — Total debt $ 133,913 $ 136,149 Credit Facility The Company has a multi-currency senior secured credit facility (as amended, the "Amended Credit Agreement") with JPMorgan Chase Bank N.A., as administrative agent (the "Administrative Agent"), and a syndicate of banks (collectively the "Lenders"). On September 28, 2022, the Company amended and restated the Amended Credit Agreement, which includes (i) a five-year , $ 350 million multicurrency senior secured revolving credit facility and (ii) a five-year $ 150 million senior secured term loan facility. The Amended Credit Agreement extended the credit facility maturity date to September 28, 2027. In addition, pursuant to an “accordion feature,” the Company may increase its borrowing limit by up to an additional $ 250 million, subject to obtaining additional credit commitments from the lenders participating in the increase. The Amended Credit Agreement allows for the issuance of up to $ 50 million for letters of credit. Borrowings under the Amended Credit Agreement are guaranteed by substantially all of the domestic subsidiaries of the Company and secured by their assets. Under the terms of the revolving credit facility, the payment of cash dividends is restricted. The Company incurred debt issuance costs of $ 1.4 million in connection with the amendment and restatement of the Amended Credit Agreement. These costs were capitalized to other non-current assets on the Condensed Consolidated Balance Sheets and added to the unamortized debt issuance costs from the previous credit facility. 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. All swingline loans denominated in U.S. dollars bear interest based upon the adjusted daily simple SOFR plus an additional margin ranging from 1.00 % to 1.75 % depending upon the Company's leverage ratio, or such other rate as the Company and the applicable swingline lender may agree. The adjusted term SOFR and adjusted daily simple SOFR include a fixed credit adjustment of 0.10 % over the applicable SOFR reference rate. 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 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 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. Specifically, the Company’s Leverage Ratio must be less than or equal to 3.50 to 1.00 at all times. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the Amended Credit Agreement) must be at least 3.00 to 1.00 at the end of each fiscal quarter. 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 September 30, 2025. 16 Table of Contents 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 On August 1, 2007, the Company entered into an agreement with the State of Mississippi to provide financing for the acquisition and installation of certain equipment to be utilized at the Company’s Southaven, Mississippi warehouse, through the issuance of an industrial development revenue bond. The bond matures on September 1, 2032. The bond accrues interest at the one-month term SOFR plus an adjustment of 0.10 % plus a spread of 0.85 %. 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 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 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 The Company's results of operations could be materially impacted by significant changes in foreign currency exchange rates and interest rates. In an effort to manage the exposure to these risks, the Company periodically enters into various derivative instruments. The Company's accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with U.S. GAAP. The Company records all derivatives on the Condensed Consolidated Balance Sheet at fair value. Derivatives that are not designated as hedging instruments or the ineffective portions of cash flow hedges are adjusted to fair value through earnings in other income and expense. Foreign Currency Derivatives – The Company conducts a portion of its business internationally in a variety of foreign currencies and is exposed to market risk for changes in foreign currency exchange rates. The Company attempts to hedge transaction exposures with natural offsets to the fullest extent possible and once these opportunities have been exhausted the Company uses currency options and forward contracts or other hedging instruments with third parties. These contracts will periodically hedge the exchange of various currencies, including the U.S. dollar, Brazilian real, euro, British pound and Canadian dollar. 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 ended September 30, 2025 and 2024 are as follows: Quarter ended September 30, 2025 2024 (in thousands) 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 Net foreign currency exchange gains and losses consist of foreign currency transactional and functional currency re-measurements, offset by net foreign currency exchange contract gains and losses and are included in other income and expense. Foreign exchange gains and losses are primarily generated as the result of fluctuations in the value of the U.S. dollar versus the Brazilian real and the Canadian dollar versus the U.S. dollar. 17 Table of Contents Interest Rates - The Company’s earnings are also affected by changes in interest rates due to the impact those changes have on interest expense from floating rate debt instruments. The Company manages its exposure to changes in interest rates by using interest rate swaps to hedge this exposure and to achieve a desired proportion of fixed versus floating rate debt. On April 30, 2019, the Company entered into an interest rate swap agreement to lock into a fixed LIBOR interest rate, which was amended on September 28, 2022, to change the reference rate from LIBOR to SOFR. The swap agreement has a notional amount of $ 100.0 million, with a $ 50.0 million tranche that matured on April 30, 2024 and a $ 50.0 million tranche scheduled to mature April 30, 2026. On March 31, 2023, the Company entered into an interest rate swap agreement to lock into a fixed SOFR interest rate with a notional amount of $ 25.0 million and a maturity date of March 31, 2028. These interest rate swap agreements are designated as cash flow hedges to hedge the variable rate interest payments on the revolving credit facility. Interest rate differentials paid or received under the swap agreements are recognized as adjustments to interest expense. 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 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, 2025 2024 (in thousands) Net interest income recognized as a result of interest rate swap $ ( 322 ) $ ( 508 ) 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 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 Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments Fair Value of Derivatives Designated as Hedge Instruments Fair Value of Derivatives Not Designated as Hedge Instruments (in thousands) Derivative assets: Forward foreign currency exchange contracts Prepaid expenses and other current assets $ — $ — $ — $ 15 Interest rate swap agreement Other non-current assets $ 373 $ — $ 680 $ — Derivative liabilities: Forward foreign currency exchange contracts Accrued expenses and other current liabilities $ — $ 6 $ — $ — Foreign currency hedge Accrued expenses and other current liabilities $ 89 $ — $ 290 $ — 18 Table of Contents (9) Fair Value of Financial Instruments Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company classifies certain assets and liabilities based on the fair value hierarchy, which aggregates fair value measured assets and liabilities based upon the following levels of inputs: • Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and • Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The assets and liabilities maintained by the Company that are required to be measured at fair value on a recurring basis include deferred compensation plan investments, forward foreign currency exchange contracts, foreign currency hedge agreements, interest rate swap agreements and contingent consideration owed to the sellers of Advantix Solutions Group, Inc ("Advantix") and Secure Path Networks, LLC dba Resourcive ("Resourcive"). 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 September 30, 2025: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (in thousands) Assets: Deferred compensation plan investments, current and non-current $ 35,388 $ 35,388 $ — $ — Interest rate swap agreement 373 — 373 — Total assets at fair value $ 35,761 $ 35,388 $ 373 $ — Liabilities: 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 Total liabilities at fair value $ 53,522 $ 35,388 $ 95 $ 18,039 19 Table of Contents The following table summarizes the valuation of the Company’s remaining assets and liabilities measured at fair value on a recurring basis at June 30, 2025: Total Quoted prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (in thousands) Assets: 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 — Total assets at fair value $ 32,582 $ 31,887 $ 695 $ — Liabilities: Deferred compensation plan investments, current and non-current $ 31,887 $ 31,887 $ — $ — 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 The investments in the deferred compensation plan are held in a "rabbi trust" and include securities and cash equivalents for payment of non-qualified benefits for certain retired, terminated and active employees. These investments are recorded to prepaid expenses and other current assets or other non-current assets depending on their corresponding, anticipated distribution dates to recipients, which are reported in accrued expenses and other current liabilities or other long-term liabilities, respectively. Derivative instruments, such as foreign currency forward contracts, are measured using the market approach on a recurring basis considering foreign currency spot rates and forward rates quoted by banks or foreign currency dealers and interest rates quoted by banks (Level 2). Fair values of interest rate swaps are measured using standard valuation models with inputs that can be derived from observable market transactions, including SOFR spot and forward rates (Level 2). Foreign currency contracts and interest rate swap agreements are classified in the Condensed Consolidated Balance Sheets as prepaid expenses and other non-current assets or accrued expenses and other long-term liabilities, depending on the respective instruments' favorable or unfavorable positions. See Note 8 - Derivatives and Hedging Activities . The Company recorded a contingent consideration liability at the acquisition date of both Advantix and Resourcive. These liabilities represent the amounts payable to 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 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 (in thousands) 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 20 Table of Contents Contingent consideration for the quarter ended September 30, 2024 Specialty Technology Solutions Intelisys & Advisory Total (in thousands) Fair value at beginning of period $ — $ — $ — Issuance of contingent consideration 7,500 9,700 17,200 Fair value at end of period $ 7,500 $ 9,700 $ 17,200 The fair values of amounts owed are recorded in current portion of contingent consideration and long-term portion of contingent consideration in the Company’s Condensed Consolidated Balance Sheets. In accordance with ASC 805, the Company will revalue the contingent consideration liability at each reporting date through the last payment, with changes in the fair value of the contingent consideration reflected in the change in fair value of contingent consideration line item on the Company’s Condensed Consolidated Income Statements that is included in the calculation of operating income. The fair value of the contingent consideration liability associated with future earnout payments is based on several factors, including but not limited to: • estimated future results, net of pro forma adjustments set forth in the purchase agreements; • a risk premium reflective of the Company’s creditworthiness and market risk premium associated with the United States markets. Advantix Advantix is part of the Specialty Technology Solutions segment. The fair value of the contingent consideration is determined using a static discounted cash flow model. The fair value of the liability for the contingent consideration related to Advantix recognized at September 30, 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 Resourcive is part of the Intelisys & Advisory segment. The fair value of the contingent consideration for Resourcive is determined using a Monte Carlo simulation. The fair value of the liability for the contingent consideration related to Resourcive recognized at September 30, 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. Valuation techniques and significant observable inputs used in recurring Level 3 fair value measurements for the Company's contingent consideration liabilities related to Advantix and Resourcive at September 30, 2025 were as follows. Acquisition Reporting Period Valuation Technique Significant Unobservable Inputs Weighted Average Rates Advantix September 30, 2025 Discounted cash flow Adjusted EBITDA risk premium 15.3 % Adjusted EBITDA growth rate 22.0 % Resourcive September 30, 2025 Monte Carlo Adjusted EBITDA risk premium 12.7 % Simulated commission growth percentage 24.2 % 21 Table of Contents (10) Segment Information 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 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 - 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; and • Connectivity - managed connectivity and wireless enablement solutions. Intelisys & Advisory Segment 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 • Security • Managed AI • 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. 22 Table of Contents 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) Total 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 Operating income (loss) $ 20,375 $ 5,818 $ ( 290 ) $ 25,903 Other Segment Items Depreciation and amortization (c) $ 3,970 $ 2,230 $ — $ 6,200 Change in fair value of contingent consideration (d) $ 145 $ 169 $ — $ 314 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 Other Segment Items Depreciation and amortization (c) $ 4,626 $ 2,125 $ 720 $ 7,471 Capital expenditures $ ( 2,228 ) $ ( 147 ) $ — $ ( 2,375 ) (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 (c) Depreciation and amortization expense is primarily included within Other operating expenses (d) Change in fair value of contingent consideration is included within Other operating expenses Quarter ended September 30, 2025 2024 (in thousands) Sales by Geography Category: 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) 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. 23 Table of Contents September 30, 2025 June 30, 2025 (in thousands) Assets: Specialty Technology Solutions $ 1,494,057 $ 1,564,119 Intelisys & Advisory 222,919 221,487 $ 1,716,976 $ 1,785,606 Property and equipment, net by Geography Category: United States $ 14,685 $ 15,047 Brazil 17,536 16,122 $ 32,221 $ 31,169 (11) Leases In accordance with Accounting Standards Codification ("ASC") 842, at contract inception the Company determines if a contract contains a lease by assessing whether the contract contains an identified asset and whether the Company has the ability to control the asset. The Company also determines if the lease meets the classification criteria for an operating lease versus a finance lease under ASC 842. Substantially all of the Company's leases are operating leases for real estate, warehouse and office equipment ranging in duration from 1 year to 10 years. The Company has elected not to record short-term operating leases with an initial term of 12 months or less on the Condensed Consolidated Balance Sheets. Operating leases are recorded as other non-current assets, accrued expenses and other current liabilities and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Company has finance leases for information technology equipment expiring through fiscal year 2028. 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 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. The Company generally is not able to determine the rate implicit in its leases and has elected to apply an incremental borrowing rate as the discount rate for the present value determination, which is based on the Company's cost of borrowings for the relevant terms of each lease and geographical economic factors. Certain operating lease agreements contain options to extend or terminate the lease. The lease term used is adjusted for these options when the Company is reasonably certain it will exercise the option. Operating lease expense is recognized on a straight-line basis over the lease term. Variable lease payments not based on a rate or index, such as costs for common area maintenance, are expensed as incurred. 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 September 30, 2025 and June 30, 2025: September 30, 2025 June 30, 2025 Operating leases Balance Sheet location (in thousands) Operating lease right-of-use assets Other non-current assets $ 10,433 $ 10,258 Current operating lease liabilities Accrued expenses and other current liabilities $ 4,066 $ 3,985 Long-term operating lease liabilities Other long-term liabilities $ 7,139 $ 6,972 24 Table of Contents 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 ended September 30, 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 September 30, 2025 2024 (in thousands) Operating lease cost $ 1,230 $ 1,121 Variable lease cost 360 332 $ 1,590 $ 1,453 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, 2025 2024 (in thousands) Cash paid for amounts in the measurement of lease liabilities $ 1,136 $ 1,132 Right-of-use assets obtained in exchange for lease obligations 1,385 2,461 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 September 30, 2025: Operating leases (in thousands) 2026 $ 3,613 2027 4,580 2028 2,392 2029 1,570 2030 999 Total future payments 13,154 Less: amounts representing interest 1,949 Present value of lease payments $ 11,205 (12) Commitments and Contingencies The Company is, from time to time, party to lawsuits arising out of operations. 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, 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. 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. 25 Table of Contents 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 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. 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 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 $ 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 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. federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries and states in which it operates. With certain exceptions, the Company is no longer subject to federal, state and local or non-U.S. income tax examinations by tax authorities for the years before June 30, 2020. (14) Restructurings In January 2024 and September 2024, as part of a strategic review of organizational structure and operations, the Company executed cost reduction and restructuring programs to align our cost structure with demand expectations in our business. 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 three months ended September 30, 2025: Accrued Expenses (in thousands) Balance at June 30, 2025 $ 555 Cash payments ( 404 ) Balance at September 30, 2025 $ 151 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. 26 Table of Contents (15) Business Acquisitions On August 8, 2024, ScanSource acquired substantially all of the assets of Resourcive, a leading technology advisor, through its subsidiary ScanSource Agency, Inc. Resourcive delivers strategic IT sourcing solutions to mid-market and enterprise businesses. On August 15, 2024, ScanSource acquired, through its subsidiary Advantix ScanSource, LLC, substantially all of the assets of Advantix, a managed connectivity experience provider specializing in wireless enablement solutions. The combined initial purchase price of these acquisitions, net of cash acquired, was approximately $ 56.7 million. The Advantix acquisition is included in the Specialty Technology Solutions segment, and the Resourcive acquisition is included in the Intelisys & Advisory segment. Both acquisitions included future earnout payments, and the Company recorded contingent consideration liabilities at the acquisition dates representing the fair value of estimated amounts payable to sellers. See Note 9 - Fair Value of Financial Instruments for the related disclosures regarding the contingent consideration liabilities recognized in connection with these acquisitions. The purchase prices were allocated to the assets acquired and liabilities assumed based on their estimated fair values on the transaction dates. Intangible assets acquired include trade names, customer relationships, and developed technology. See Note 6 - Goodwill and Other Identifiable Intangible Assets for the amounts of goodwill and intangible assets recognized in connection with these acquisitions. The allocation of the purchase prices to the assets and liabilities acquired, including the valuation of the identifiable intangible assets, has not been concluded as of the reporting date. The impact of these acquisitions was not material to the consolidated financial statements. The Company 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.