What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2026-02-05 · 151 added, 162 removed, 404 unchanged (44% of the section changed)

12 unchanged sentences

Impact of the Macroeconomic Environment, Including Growth Outlook, Inflation and Tariffs

The macroeconomic environment, including the economic impacts of growth outlook, inflationary pressures, tariffs and evolving geopolitical and trade relationships , continues to create significant uncertainty and may adversely affect our financial condition and results of operations.

The macroeconomic environment, including the economic impacts of growth outlook, inflationary pressures, tariffs and evolving geopolitical conflicts and trade relationships, continues to create significant uncertainty and may adversely affect our financial condition and results of operations.

In 2026, the U.S.

announced a variety of additional tariffs on goods from multiple nations and trading blocks, prompting reciprocal tariffs and other retaliatory actions in response.

Supreme Court invalidated the tariffs imposed under the International Emergency Economic Powers Act (IEEPA);

however, certain other tariffs remain in effect and the current administration has indicated that it will continue seeking to implement tariffs through other statutory authorities.

Further, the ongoing conflict with Iran and geopolitical tensions has resulted in volatility in the global energy and commodity markets and increased uncertainty in the macroeconomic environment.

International trade policy and diplomatic dynamics continue to shift, and the full implications remain uncertain.

We remain mindful of the potential impact these conditions could have on our channel sales partners, suppliers and end-user demand.

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 through to our channel sales partners any supplier price increases resulting from tariffs.

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

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.

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

We 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 through to our channel sales partners any supplier price increases resulting from tariffs or other factors.

We are also mitigating related risks through strategic planning and maintaining financial flexibility;

however, we cannot predict the effectiveness of our mitigation strategies or the ultimate impact of tariffs and the global macroeconomic environment on our financial condition or results of operations.

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.

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.

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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 six months ended December 31, 2025 and 2024:

Quarter ended December 31, % Change, Constant Currency, Excluding Acquisitions (a)

The following tables summarize our net sales results by operating segment and by geographic location for the quarters and nine months ended March 31, 2026 and 2025:

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

Net Sales by Segment:

4 unchanged sentences

Total net sales $ 766,790 $ 704,847 $ 61,943 8.8 % 7.6 %

Six months ended December 31, % Change, Constant Currency, Excluding Acquisitions (a)

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

2026 2025 $ Change % Change

6 unchanged sentences

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

For the quarter ended December 31, 2025, net sales increased $18.3 million, or 2.5%, compared to the prior-year period.

Excluding the impact of acquisitions and the impact of foreign exchange rate fluctuations, adjusted net sales increased $11.8 million , or 1.6%, for the quarter ended December 31, 2025.

The increase for the quarter is primarily a result of growth in North America.

For the six months ended December 31, 2025, net sales decreased $18.6 million, or 1.3%, compared to the prior-year period.

E xcluding the impact from acquisitions and the impact from foreign exchange rate fluctuations, adjusted net sales decreased $29.8 million, or 2.0%, for the six months ended December 31, 2025, compared to the prior-year period.

The decrease in net sales for the six months is primarily due to lower large deals.

For the quarter ended March 31, 2026, net sales increased $62.3 million, or 9.2%, compared to the prior-year period.

Excluding the impact of acquisitions and the impact of foreign exchange rate fluctuations, adjusted net sales increased $54.1 million , or 8.0%, for the quarter ended March 31, 2026.

The increase for the quarter is primarily a result of growth across most technologies in North America.

For the nine months ended March 31, 2026, net sales increased $43.7 million, or 2.0%, compared to the prior-year period.

E xcluding the impact from acquisitions and the impact from foreign exchange rate fluctuations, adjusted net sales increased $24.4 million, or 1.1%, for the nine months ended March 31, 2026, compared to the prior-year period.

The increase in net sales for the nine months ended March 31, 2026 is primarily due to growth across most technologies in North America.

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 and six months ended December 31, 2025, net sales increased $0.8 million, or 3.1%, and $1.7 million, or 3.5%, respectively, compared to the prior-year periods.

The increase in net sales reflects Intelisys organic net sales growth.

Excluding the impact from foreign exchange rate fluctuations and the impact of acquisitions, adjusted net sales increased $0.8 million, or 3.1%, and $0.9 million, or 1.9%, for the quarter and six months ended December 31, 2025, respectively.

The increase in net sales for the quarter and six months ended December 31, 2025 reflects Intelisys organic net sales growth.

Quarterly net billings for Intelisys increased 2.5% over the prior-year quarter to bring annualized net billings to approximately $2.85 billion.

Quarter ended December 31, % Change, Constant Currency, Excluding Acquisitions (a)

For the quarter ended March 31, 2026, net sales decreased $0.4 million, or 1.5%, compared to the prior-year period.

The decrease in net sales for the quarter ended March 31, 2026 primarily reflects lower Resourcive sales.

For the nine months ended March 31, 2026, net sales increased $1.3 million, or 1.7%, compared to the prior-year periods.

The increase in net sales for the nine months ended March 31, 2026 primarily reflects higher Intelisys sales.

Excluding the impact of acquisitions, adjusted net sales increased $0.5 million, or 0.7%, for the nine months ended March 31, 2026.

Quarterly annualized net billings for Intelisys totaled approximately $2.88 billion.

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

Net Sales by Geography:

5 unchanged sentences

$ 766,790 $ 704,847 $ 61,943 8.8 % 7.6 %

Six months ended December 31, % Change, Constant Currency, Excluding Acquisitions (a)

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

2026 2025 $ Change % Change

(in thousands)

United States and Canada $ 1,389,582 $ 1,399,130 $ (9,548) (0.7) % (1.1) %

United States $ 2,099,864 $ 2,056,094 $ 43,770 2.1 % 1.7 %

Brazil 173,089 171,830 1,259 0.7 % (5.8) %

2 unchanged sentences

(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 the United States and Brazil represent less than 5.0% of net sales for the quarters and six months ended December 31, 2025 and 2024.

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

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

(b) Countries outside of the United States and Brazil represent less than 5.0% of net sales for the quarters and nine months ended March 31, 2026 and 2025.

The following table summarizes our gross profit for the quarters and nine months ended March 31, 2026 and 2025:

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

2026 2025 $ Change % Change 2026 2025

3 unchanged sentences

Gross profit $ 107,124 $ 100,202 $ 6,922 6.9 % 14.0 % 14.2 %

Six months ended December 31, % of Net Sales December 31,

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

2026 2025 $ Change % Change 2026 2025

8 unchanged sentences

Specialty Technology Solutions

For the quarter ended December 31, 2025, gross profit dollars for the Specialty Technology Solutions segment increased $0.5 million, or 0.6%, compared to the prior-year quarter.

Higher sales volumes, after considering cost of goods sold, and favorable supplier recognition program, impacted gross profit by $2.6 million.

Higher freight costs reduced gross profit by $2.1 million for the quarter.

Gross profit margin decreased 20 basis points over the prior-year quarter to 10.5%.

For the six months ended December 31, 2025, gross profit dollars increased $5.9 million, or 3.8%, compared to the prior-year period.

Favorable sales mix and supplier program recognition positively impacted gross profit by $10.6 million.

Higher freight costs and lower sales volume, after considering cost of goods sold, reduced gross profit by $4.7 million for the six months .

Gross profit margin increased 54 basis points over the prior-year quarter to 11.1% .

For the quarter ended March 31, 2026, gross profit dollars for the Specialty Technology Solutions segment increased $7.4 million, or 10.0%, compared to the prior-year quarter.

Higher sales volumes, after considering cost of goods sold, increased gross profit by $6.8 million, and favorable supplier recognition program increased gross profit by $0.6 million.

Gross profit margin increased slightly over the prior-year quarter to 11.0%.

For the nine months ended March 31, 2026, gross profit dollars increased $13.3 million, or 5.8%, compared to the prior-year period.

Favorable supplier program recognition and sales mix increased gross profit by $8.7 million, and higher sales volumes, after considering cost of goods sold, increased gross profit by $4.7 million.

Gross profit margin increased 39 basis points over the prior-year period to 11.1% .

Intelisys & Advisory

For the quarter ended December 31, 2025, gross profit dollars for the Intelisys & Advisory segment increased $0.7 million, or 3.0%, compared to the prior-year quarter.

Higher sales volume primarily attributable to Intelisys increased gross profit for the quarter.

For the quarter ended March 31, 2026, gross profit dollars for the Intelisys & Advisory segment decreased $0.5 million, or 1.9%, compared to the prior-year quarter.

Lower sales volumes, decreased gross profit for the quarter.

Gross profit margin decreased 46 basis points compared to the prior-year quarter to 98.8%.

For the six months ended December 31, 2025, gross profit dollars increased $1.1 million, or 2.4%, compared to the prior-year period.

Higher sales volume primarily attributable to Intelisys sales growth increased gross profit for the six months by $1.6 million.

The increase in gross profit was partially offset by less favorable sales mix of $0.5 million due to a higher mix of services.

Gross profit margin decreased 108 basis points over the prior-year quarter to 98.1% .

For the nine months ended March 31, 2026, gross profit dollars increased $0.6 million, or 0.9%, compared to the prior-year period.

Higher sales volume primarily attributable to Intelisys sales growth increased gross profit for the nine months ended March 31, 2026 by $1.3 million.

The increase in gross profit was partially offset by a less favorable sales mix of $0.7 million due to a higher mix of services.

Gross profit margin decreased 86 basis points over the prior-year period to 98.3% .

Operating Expenses

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

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

The following table summarizes our operating expenses for the quarters and nine months ended March 31, 2026 and 2025:

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

2026 2025 $ Change % Change 2026 2025

3 unchanged sentences

Intangible amortization expense 4,001 4,941 (940) (19.0) % 0.5 % 0.7 %

Restructuring and other charges — 313 (313) (100.0) % 0.0 % 0.0 %

Change in fair value of contingent consideration 1,209 1,143 66 *nm 0.2 % 0.2 %

Change in fair value of contingent consideration 440 904 (464) (51.3) % 0.1 % 0.1 %

Operating expenses $ 84,004 $ 77,863 $ 6,141 7.9 % 11.0 % 11.0 %

Six months ended December 31, % of Net Sales December 31,

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

2026 2025 $ Change % Change 2026 2025

4 unchanged sentences

Restructuring and other charges — 5,381 (5,381) (100.0) % 0.0 % 0.2 %

Change in fair value of contingent consideration 1,523 1,143 380 *nm 0.1 % 0.1 %

Change in fair value of contingent consideration 1,963 2,047 (84) (4.1) % 0.1 % 0.1 %

Operating expenses $ 250,616 $ 245,131 $ 5,485 2.2 % 11.0 % 11.0 %

*nm - percentages are not meaningful

Selling, general and administrative expenses (“SG&A”) increased by $4.2 million, or 5.7%, and $7.8 million, or 5.3%, for the quarter and six months ended December 31, 2025, respectively, compared to the prior-year periods.

The increase for the quarter and six-month period ended December 31, 2025 is primarily attributable to increased costs for employee-related expenses and costs related to acquisitions.

SG&A includes customer specific bad debt expenses in Brazil for the quarter and six months ended December 31, 2025.

The decrease in depreciation expense of $1.5 million and $2.7 million during the quarter and six months ended December 31, 2025, respectively, is largely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Restructuring and other charges of $0.3 million and $5.4 million were incurred in the quarter and six months ended December 31, 2024.

Selling, general and administrative expenses (“SG&A”) increased by $8.4 million, or 12.0%, and $16.1 million, or 7.5%, for the quarter and nine months ended March 31, 2026, respectively, compared to the prior-year periods.

The increase for the quarter and nine months ended March 31, 2026 is primarily attributable to increased costs for employee-related expenses and costs related to acquisitions.

SG&A includes customer specific bad debt expenses in Brazil for the nine months ended March 31, 2026.

The decrease in depreciation expense of $0.8 million and $3.6 million during the quarter and nine months ended March 31, 2026, respectively, is largely due to certain ERP software assets being fully depreciated in the previous fiscal year.

Restructuring and other charges of $5.4 million were incurred in the nine months ended March 31, 2025.

Restructuring and other charges relate to employee separation and benefit costs in connection with our expense reduction and restructuring plans implemented during the 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 $1.2 million and $1.5 million in the quarter and six months ended December 31, 2025, respectively.

The expense from changes in fair value of contingent consideration for the quarter and six months ended December 31, 2025 is largely due to the recurring amortization of the unrecognized fair value discount as well as the addition of a new acquisition in the quarter.

We recorded a fair value adjustment expense of $0.4 million and $2.0 million in the quarter and nine months ended March 31, 2026, respectively.

The expense from changes in fair value of contingent consideration for the quarter and nine months ended March 31, 2026 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 six months ended December 31, 2025 and 2024:

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

The following table summarizes our operating income for the quarters and nine months ended March 31, 2026 and 2025:

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

2026 2025 $ Change % Change 2026 2025

4 unchanged sentences

Operating income $ 23,120 $ 22,339 $ 781 3.5 % 3.0 % 3.2 %

Six months ended December 31, % of Net Sales December 31,

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

2026 2025 $ Change % Change 2026 2025

6 unchanged sentences

Specialty Technology Solutions

For the Specialty Technology Solutions segment, operating income decreased $3.1 million, or 21.9% for the quarter ended December 31, 2025, compared to an increase of $0.6 million, or 1.8% for the six months ended December 31, 2025, compared to the prior-year periods.

Operating margin was 1.5% and 2.2% for the quarter and six months ended December 31, 2025, respectively.

The decrease in operating income for the quarter ended December 31, 2025 is primarily due to increased costs related to acquisitions as well as employee-related expenses.

The increase in operating income for the six months is primarily due to higher gross profits for the six months ended December 31, 2025.

For the Specialty Technology Solutions segment, operating income increased $0.8 million, or 5.9%, and $1.4 million, or 3.1%, for the quarter and nine months ended March 31, 2026, respectively, compared to the prior-year periods.

Operating margin was 2.0% and 2.1% for the quarter and nine months ended March 31, 2026, respectively.

The increase in operating income for the quarter and nine months ended March 31, 2026 is primarily due to higher gross profits.

Intelisys & Advisory

For the Intelisys & Advisory segment, operating income increased $1.1 million, or 16.7%, and $0.5 million, or 3.7%, respectively, for the quarter and six months ended December 31, 2025, respectively, compared to the prior-year periods.

Operating margin increased to 30.1% for the quarter ended December 31, 2025 and remained consistent at 27.1% for the six months ended December 31, 2025.

The increase in operating income for the quarter comparative period is primarily driven by higher by sales volume.

For the quarter and six months ended December 31, 2025, Corporate operating losses of $0.6 million and $0.9 million, respectively, primarily represents acquisition-related costs.

For the quarter and six months ended December 31, 2024, Corporate operating losses of $2.1 million and $7.6 million, respectively, represent restructuring, acquisition-related costs and a legal settlement incurred in December 2024.

For the Intelisys & Advisory segment, operating income decreased $0.2 million, or 2.1% for the quarter ended March 31, 2026.

The decrease in operating income for the quarter ended March 31, 2026 is primarily due to lower advisory sales in the quarter.

Operating income increased $0.3 million , or 1.4% for the nine months ended March 31, 2026.

The increase in operating income is primarily the result of higher Intelisys sales.

For the quarter and nine months ended March 31, 2026, Corporate operating losses of $0.2 million and $1.1 million, respectively, primarily represents acquisition-related costs.

For the quarter and nine months ended March 31, 2025, Corporate operating losses of $0.3 million and $7.9 million, respectively, represent restructuring, acquisition-related costs and a legal settlement incurred in December 2024.

Total Other (Income) Expense

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

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

The following table summarizes our total other (income) expense for the quarters and nine months ended March 31, 2026 and 2025:

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

2026 2025 $ Change % Change 2026 2025

2 unchanged sentences

Interest income (2,451) (2,841) 390 (13.7) % (0.3) % (0.4) %

Net foreign exchange losses (gains) 658 (252) 910 (361.1) % 0.1 % (0.0) %

Net foreign exchange losses 399 130 269 206.9 % 0.1 % 0.0 %

Other, net (183) (1,012) 829 (81.9) % (0.0) % (0.1) %

Total other (income) expense, net $ (932) $ (1,887) $ 955 (50.6) % (0.1) % (0.3) %

Six months ended December 31, % of Net Sales December 31,

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

2026 2025 $ Change % Change 2026 2025

7 unchanged sentences

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 six months ended December 31, 2025 compared to the prior-year periods, primarily from lower average borrowings on our multi-currency revolving credit facility and lower interest rates.

Interest income increased for the quarter and six months ended December 31, 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.

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

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

dollar, the euro versus the U.S.

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

Interest expense decreased for the quarter and nine months ended March 31, 2026 compared to the prior-year periods, primarily from lower average borrowings on our term loan credit facility and lower interest rates.

Interest income for the quarter and nine months ended March 31, 2026 was generated from interest income on cash balances and customer receivables.

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

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.

We partially offset foreign currency exposure with the use of foreign exchange contracts to hedge against these exposures.

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

Other net income increased for the quarter ended December 31, 2025, due to a $0.8 million insurance recovery in connection with the cybersecurity attack in fiscal year 2023.

Other net income decreased for the six months ended December 31, 2025 due to a larger insurance recovery of $5.4 million related to the cybersecurity attack recognized in the prior year period.

Other net income decreased for the quarter ended March 31, 2026 compared to the prior-year quarter, due to a $0.8 million insurance recovery in connection with the cybersecurity attack that occurred in fiscal year 2023.

Other net income decreased for the nine months ended March 31, 2026 due to a larger insurance recovery of $6.4 million related to the cybersecurity attack recognized in the prior year period.

Provision for Income Taxes

For the quarter and six months ended December 31, 2025, income tax expense was $2.9 million and $10.0 million reflecting an effective tax rate of 15.1% and 21.6%, respectively.

In comparison, for the quarter and six months ended December 31, 2024, income tax expense was $2.7 million and $8.6 million reflecting an effective tax rate of 13.5% and 20.3%, respectively.

For the quarter and nine months ended March 31, 2026, income tax expense was $7.2 million and $17.2 million, respectively, reflecting an effective tax rate of 29.8% and 24.4%, respectively.

In comparison, 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%, respectively.

We expect the effective tax rate, excluding discrete items, for fiscal year 2026 to be approximately 27.9% 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 December 31, 2025 and 2024, respectively:

Quarter ended December 31,

The following table summarizes annualized adjusted ROIC for the quarters ended March 31, 2026 and 2025, respectively:

Quarter ended March 31,

Adjusted return on invested capital ratio, annualized (a)

3 unchanged sentences

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

Quarter ended December 31,

Quarter ended March 31,

(in thousands)

9 unchanged sentences

Cyberattack restoration costs 16 71

Restructuring costs — 313

Legal settlement — 1,579

Tax recovery — (1,820)

1 unchanged sentence

Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP) $ 35,621 $ 35,053

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

Quarter ended December 31,

Quarter ended March 31,

(in thousands)

6 unchanged sentences

Cyberattack restoration costs, net 12 54

Restructuring, net — 236

Legal settlement — 1,189

Insurance recovery, net of payments (629) —

Tax recovery, net — (1,201)

Insurance recovery, net of payments — (570)

Average equity 910,297 901,876

16 unchanged sentences

Net Sales by Segment:

Quarter ended December 31,

Quarter ended March 31,

2026 2025 $ Change % Change

6 unchanged sentences

Intelisys & Advisory:

Non-GAAP net sales $ 24,972 $ 24,220 $ 752 3.1 %

Net sales, reported $ 26,025 $ 26,414 $ (389) (1.5) %

Consolidated:

4 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 December 31, 2025 into U.S.

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

Calculated by translating the net sales for the quarter ended March 31, 2026 into U.S.

dollars using the average foreign exchange rates for the quarter ended March 31, 2025.

Net Sales by Segment:

Six months ended December 31,

Nine months ended March 31,

2026 2025 $ Change % Change

14 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 six months ended December 31, 2025 into U.S.

dollars using the average foreign exchange rates for the six months ended December 31, 2024.

Calculated by translating the net sales for the nine months ended March 31, 2026 into U.S.

dollars using the average foreign exchange rates for the nine months ended March 31, 2025.

Net Sales by Geography:

Quarter ended December 31,

Quarter ended March 31,

2026 2025 $ Change % Change

8 unchanged sentences

Foreign exchange impact (c)

Non-GAAP net sales, constant currency $ 54,734 $ 60,386 $ (5,652) (9.4) %

Non-GAAP net sales $ 50,830 $ 47,883 $ 2,947 6.2 %

Consolidated:

3 unchanged sentences

Acquisitions (2,519) —

Non-GAAP net sales, constant currency $ 760,066 $ 747,497 $ 12,569 1.7 %

Non-GAAP net sales $ 758,592 $ 704,847 $ 53,745 7.6 %

(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 December 31, 2025 and 2024.

(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the quarters ended December 31, 2025 and 2024.

operations and represent less than 5% of United States net sales for the quarters ended March 31, 2026 and 2025.

(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the quarters ended March 31, 2026 and 2025.

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

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

Six months ended December 31,

Calculated by translating the net sales for the quarter ended March 31, 2026 into U.S.

dollars using the average foreign exchange rates for the quarter ended March 31, 2025.

Nine months ended March 31,

2026 2025 $ Change % Change

United States and Canada:

United States:

(in thousands)

Net sales, as reported $ 1,389,582 $ 1,399,130 $ (9,548) (0.7) %

Net sales, reported (a)

$ 2,099,864 $ 2,056,094 $ 43,770 2.1 %

Acquisitions (13,059) (4,089)

Non-GAAP net sales 2,086,805 2,052,005 $ 34,800 1.7 %

Net sales, reported (a)

Net sales, reported (b)

$ 173,089 $ 171,830 $ 1,259 0.7 %

Foreign exchange impact (b)

Non-GAAP net sales, constant currency $ 111,083 $ 123,947 $ (12,864) (10.4) %

Foreign exchange impact (c)

Non-GAAP net sales $ 161,913 $ 171,830 $ (9,917) (5.8) %

Consolidated:

2 unchanged sentences

Acquisitions (13,059) (4,089)

Non-GAAP net sales, constant currency $ 1,490,125 $ 1,518,988 $ (28,863) (1.9) %

(a) Countries outside of Brazil represent less than $0.1 million, or 0.1% of sales, for the six months ended December 31, 2025 and $0.2 million, or 0.2% of sales, for the six months ended December 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 six months ended December 31, 2025 into U.S.

dollars using the average foreign exchange rates for the six months ended December 31, 2024.

Non-GAAP net sales $ 2,248,718 $ 2,223,835 $ 24,883 1.1 %

(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 nine months ended March 31, 2026 and 2025.

(b) Includes net sales from outside of the United States, Canada and Brazil, which represent less than 0.1% of Brazil net sales for the nine months ended March 31, 2026 and 2025.

Calculated by translating the net sales for the nine months ended March 31, 2026 into U.S.

dollars using the average foreign exchange rates for the nine months ended March 31, 2025.

Operating Income by Segment:

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

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

2026 2025 $ Change % Change 2026 2025

13 unchanged sentences

Acquisition costs 142 204 (62)

Restructuring costs — 313 (313)

Cyberattack restoration costs 16 71 (55)

Legal settlement — 1,579 (1,579)

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

6 unchanged sentences

Acquisition costs 142 204 (62)

Restructuring costs — 313 (313)

Cyberattack restoration costs 16 71 (55)

Legal settlement — 1,579 (1,579)

Non-GAAP operating income $ 27,719 $ 26,639 $ 1,080 4.1 % 3.6 % 3.8 %

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Operating Income by Segment:

Six months ended December 31, % of Net Sales December 31,

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

2026 2025 $ Change % Change 2026 2025

37 unchanged sentences

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

Quarter ended December 31, 2025

Quarter ended March 31, 2026

Measure Intangible

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

Restructuring costs Tax

Insurance recovery Tax

recovery Cyberattack

restoration costs Insurance Recovery Non-GAAP

restoration costs Non-GAAP

(in thousands, except per share data)

4 unchanged sentences

Diluted EPS $ 0.78 $ 0.14 $ 0.02 $ 0.01 $ — $ — $ — $ 0.94

Quarter ended December 31, 2024

Quarter ended March 31, 2025

Measure Intangible

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

Restructuring costs Tax

Insurance recovery Tax

recovery Cyberattack

restoration costs Legal settlement Non-GAAP

restoration costs Non-GAAP

(in thousands, except per share data)

4 unchanged sentences

Diluted EPS $ 0.74 $ 0.16 $ 0.03 $ 0.01 $ (0.02) $ (0.05) $ — $ 0.86

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

Six months ended December 31, 2025

(a) Acquisition costs for the quarters ended March 31, 2026 and 2025 are generally nondeductible for tax purposes.

Nine months ended March 31, 2026

Measure Intangible

8 unchanged sentences

Diluted EPS $ 2.42 $ 0.43 $ 0.07 $ 0.05 $ — $ (0.14) $ — $ (0.03) $ — $ 2.80

Six months ended December 31, 2024

Nine months ended March 31, 2025

Measure Intangible

8 unchanged sentences

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

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

(a) Acquisition costs for the nine months ended March 31, 2026 and 2025 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 $83.5 million at December 31, 2025, compared to $126.2 million at June 30, 2025, including $31.1 million and $46.3 million held outside of the United States at December 31, 2025 and June 30, 2025, respectively.

Checks released but not yet cleared in the amount of $0.2 million and $0.1 million are included in accounts payable at December 31, 2025 and June 30, 2025, respectively.

Our cash and cash equivalents balance totaled $120.3 million at March 31, 2026, compared to $126.2 million at June 30, 2025, including $33.8 million and $46.3 million held outside of the United States at March 31, 2026 and June 30, 2025, respectively.

Checks released but not yet cleared in the amount of $0.2 million and $0.1 million are included in accounts payable at March 31, 2026 and June 30, 2025, respectively.

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

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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 $1.7 million to $519.0 million at December 31, 2025 from $520.7 million at June 30, 2025, primarily from a decrease in accounts receivable, partially offset by an increase in inventories and a decrease in accounts payable.

Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $52.3 million to $468.4 million at March 31, 2026 from $520.7 million at June 30, 2025, as a result of an increase in accounts payable and a decrease in accounts receivable.

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.

Six months ended

Nine months ended

(in thousands)

4 unchanged sentences

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 $54.1 million and $38.6 million for the six months ended December 31, 2025 and December 31, 2024, respectively .

Cash provided by operating activities for the six months ended December 31, 2025 is primarily attributable to net income and changes in working capital balances.

Compared to December 31, 2024 , accounts payable and accounts receivable increased 10.8% and 10.3%, respectively.

The number of days sales outstanding ("DSO") was 71 days at December 31, 2025, compared to 70 days at June 30, 2025 and 66 days at December 31, 2024.

Inventory turned 5.3 times during the quarter ended December 31, 2025, compared to 5.9 times during the quarter ended June 30, 2025 and 5.2 times in the prior-year quarter ended December 31, 2024.

Cash used in investing activities for the six months ended December 31, 2025 was $22.7 million, compared to cash used in investing activities of $58.5 million in the prior-year period.

Cash used in investing activities for the six months ended December 31, 2025 represents cash paid for acquisitions and capital expenditures.

Cash used in investing activities for the six months ended December 31, 2024 represents cash paid for acquisitions and capital expenditures offset by cash received for disposal of business.

Net cash provided by operating activities was $125.4 million and $104.7 million for the nine months ended March 31, 2026 and March 31, 2025, respectively .

Cash provided by operating activities for the nine months ended March 31, 2026 is primarily attributable to net income and changes in working capital balances.

Compared to March 31, 2025 , accounts payable and accounts receivable increased 19.6% and 11.7%, respectively.

The number of days sales outstanding ("DSO") was 74 days at March 31, 2026, compared to 70 days at June 30, 2025 and 72 days at March 31, 2025.

Inventory turned 5.4 times during the quarter ended March 31, 2026, compared to 5.9 times during the quarter ended June 30, 2025 and 5.0 times in the prior-year quarter ended March 31, 2025.

Cash used in investing activities for the nine months ended March 31, 2026 was $25.0 million, compared to cash used in investing activities of $59.9 million in the prior-year period.

Cash used in investing activities for the nine months ended March 31, 2026 represents cash paid for acquisitions and capital expenditures.

Cash used in investing activities for the nine months ended March 31, 2025 represents cash paid for acquisitions and capital expenditures offset by cash received for disposal of business.

Management expects capital expenditures for fiscal year 2026 to range from $8.0 million to $10.0 million, primarily for IT and warehouse investments.

For the six months ended December 31, 2025 and December 31, 2024 , cash used in financing activities totaled $73.3 million and $52.4 million, respectively.

Cash used in financing activities for the six months ended December 31, 2025 represents repayments on long-term debt and common stock repurchases.

Cash used in financing activities for the six months ended December 31, 2024 is primarily attributable to common stock repurchases.

For the nine months ended March 31, 2026 and March 31, 2025 , cash used in financing activities totaled $107.0 million and $83.4 million, respectively.

Cash used in financing activities for the nine months ended March 31, 2026 represents common stock repurchases and repayments on long-term debt.

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

Credit Facility

15 unchanged sentences

In connection with entering into the New Credit Agreement, on December 18, 2025, the Company terminated and repaid all indebtedness and other obligations outstanding under its Third Amended and Restated Credit Agreement (the “Prior Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto, which provided for (i) a five-year, $350 million multicurrency senior secured revolving credit facility and (ii) a five-year $150 million senior secured term loan facility.

During the quarter and six months ended December 31, 2025, all of the Company's borrowings under New Credit Agreement and Prior Credit Agreement were U.S.

During the quarter and nine months ended March 31, 2026, all of the Company's borrowings under New Credit Agreement and Prior Credit Agreement were U.S.

dollar loans.

The spread in effect as of December 31, 2025 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans.

The commitment fee rate in effect at December 31, 2025 was 0.15%.

The effective interest rates for the term loan were 4.72% and 5.43% as of December 31, 2025 and June 30, 2025, respectively.

The spread in effect as of March 31, 2026 was 1.00% for SOFR-based loans and 0.00% for alternate base rate loans.

The commitment fee rate in effect at March 31, 2026 was 0.15%.

The effective interest rates for the term loan were 4.67% and 5.43% as of March 31, 2026 and June 30, 2025, respectively.

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

2 unchanged sentences

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

The Company was in compliance with all covenants under the New Credit Agreement at December 31, 2025.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, was $1.7 million an d $0.3 million during the six month periods ended December 31, 2025 and 2024, respectively.

There was $400.0 million and $350.0 million available for additional borrowings as of December 31, 2025 and June 30, 2025, respectively.

The effective interest rates for the revolving line of credit were 4.76% and 5.46% as of December 31, 2025 and June 30, 2025, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility as of December 31, 2025 and June 30, 2025.

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.

The Company was in compliance with all covenants under the New Credit Agreement at March 31, 2026.

The average daily outstanding balance on the revolving credit facility, excluding the term loan facility, was $1.2 million an d $0.3 million during the nine-month periods ended March 31, 2026 and 2025, respectively.

There was $400.0 million and $350.0 million available for additional borrowings as of March 31, 2026 and June 30, 2025, respectively.

The effective interest rates for the revolving line of credit were 4.65% and 5.46% as of March 31, 2026 and June 30, 2025, respectively.

There were no letters of credit issued under the multi-currency revolving credit facility as of March 31, 2026 and June 30, 2025.

We also believe that our longer-term working capital, planned expenditures and other general funding requirements will be satisfied through cash flows from operations and, to the extent necessary, from our borrowing facilities.

10 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