SCANSOURCE, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview ScanSource is a leading technology distributor uniquely positioned to address complex, converging technologies and to accelerate growth for channel sales partners across hardware, SaaS, connectivity and cloud. We provide technology solutions and services from approximately 500 leading suppliers of mobility and barcode, POS, payment terminals, physical security, networking, communications, connectivity and cloud services to our approximately 25,000 channel sales partners located primarily in the United States and Brazil. We operate our business under a management structure that enhances our technology distribution growth strategy. Our segments operate primarily in the United States and Brazil: • Specialty Technology Solutions • Intelisys & Advisory We sell hardware, SaaS, connectivity and cloud solutions and services to channel sales partners that are designed to solve end users’ challenges. We operate distribution facilities that primarily support our United States business in Mississippi, California and Kentucky. Brazil distribution facilities are located in the Brazilian states of Paraná, Espirito Santo and Santa Catarina. We provide some of our digital products, which include SaaS and subscriptions, through our digital tools and platforms. Recent Developments 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 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. 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. 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 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 29 Table of Contents leading technology suppliers to channel sales partners that solve end users’ challenges. ScanSource enables channel sales partners to deliver solutions for their end users to address changing buying and consumption patterns. Our solutions may include a combination of offerings from multiple suppliers or give our channel sales partners access to additional services. As a trusted adviser to our channel sales partners, we provide converged solutions through our strong understanding of end-user needs. 30 Table of Contents Results of Operations Net Sales We have two reportable segments, which are based on sales channels. The following tables summarize our net sales results by operating segment and by geographic location for the quarters and nine months ended March 31, 2026 and 2025: Quarter ended March 31, % Change, Constant Currency, Excluding Acquisitions (a) Net Sales by Segment: 2026 2025 $ Change % Change (in thousands) Specialty Technology Solutions $ 740,765 $ 678,433 $ 62,332 9.2 % 8.0 % Intelisys & Advisory 26,025 26,414 (389) (1.5) % (1.5) % Total net sales $ 766,790 $ 704,847 $ 61,943 8.8 % 7.6 % Nine months ended March 31, % Change, Constant Currency, Excluding Acquisitions (a) 2026 2025 $ Change % Change (in thousands) Specialty Technology Solutions $ 2,197,752 $ 2,154,009 $ 43,743 2.0 % 1.1 % Intelisys & Advisory 75,201 73,915 1,286 1.7 % 0.7 % Total net sales $ 2,272,953 $ 2,227,924 $ 45,029 2.0 % 1.1 % (a) A reconciliation of non-GAAP net sales in constant currency, excluding acquisitions, is presented at the end of Results of Operations , under Non-GAAP Financial Information. Specialty Technology Solutions The Specialty Technology Solutions segment consists of sales to channel partners primarily in the United States and Brazil. 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 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. 31 Table of Contents Quarter ended March 31, % Change, Constant Currency, Excluding Acquisitions (a) Net Sales by Geography: 2026 2025 $ Change % Change (in thousands) United States $ 710,281 $ 656,964 $ 53,317 8.1 % 7.7 % Brazil 56,509 47,883 8,626 18.0 % 6.2 % Total net sales (b) $ 766,790 $ 704,847 $ 61,943 8.8 % 7.6 % Nine months ended March 31, % Change, Constant Currency, Excluding Acquisitions (a) 2026 2025 $ Change % Change (in thousands) 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) % Total net sales (b) $ 2,272,953 $ 2,227,924 $ 45,029 2.0 % 1.1 % (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 nine months ended March 31, 2026 and 2025. 32 Table of Contents Gross Profit 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 (in thousands) Specialty Technology Solutions $ 81,421 $ 73,994 $ 7,427 10.0 % 11.0 % 10.9 % Intelisys & Advisory 25,703 26,208 (505) (1.9) % 98.8 % 99.2 % Gross profit $ 107,124 $ 100,202 $ 6,922 6.9 % 14.0 % 14.2 % Nine months ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 (in thousands) Specialty Technology Solutions $ 243,552 $ 230,215 $ 13,337 5.8 % 11.1 % 10.7 % Intelisys & Advisory 73,955 73,329 626 0.9 % 98.3 % 99.2 % Gross profit $ 317,507 $ 303,544 $ 13,963 4.6 % 14.0 % 13.6 % Our gross profit is primarily affected by sales volume and gross margin mix. Gross margin mix is impacted by multiple factors, which include sales mix (proportion of sales of higher margin products or services relative to total sales), supplier program recognition (consisting of volume rebates, inventory price changes and purchase discounts) and freight costs. Increases in supplier program recognition decrease cost of goods sold, thereby increasing gross profit. Gross profit margin in our Intelisys & Advisory segment reflects a higher contribution of recurring revenue which is recorded on a net basis. Specialty Technology Solutions 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 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 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% . 33 Table of Contents Operating Expenses 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 (in thousands) Selling, general and administrative expenses $ 78,066 $ 69,698 $ 8,368 12.0 % 10.2 % 9.9 % Depreciation expense 1,497 2,320 (823) (35.5) % 0.2 % 0.3 % Intangible amortization expense 4,001 4,941 (940) (19.0) % 0.5 % 0.7 % 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 % Nine months ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 (in thousands) Selling, general and administrative expenses $ 231,455 $ 215,324 $ 16,131 7.5 % 10.2 % 9.7 % Depreciation expense 4,508 8,079 (3,571) (44.2) % 0.2 % 0.4 % Intangible amortization expense 12,690 14,300 (1,610) (11.3) % 0.6 % 0.6 % Restructuring and other charges — 5,381 (5,381) (100.0) % 0.0 % 0.2 % 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 $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 $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. 34 Table of Contents Operating Income 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 (in thousands) Specialty Technology Solutions $ 15,133 $ 14,294 $ 839 5.9 % 2.0 % 2.1 % Intelisys & Advisory 8,145 8,320 (175) (2.1) % 31.3 % 31.5 % Corporate (158) (275) 117 *nm *nm *nm Operating income $ 23,120 $ 22,339 $ 781 3.5 % 3.0 % 3.2 % Nine months ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 (in thousands) Specialty Technology Solutions $ 46,509 $ 45,110 $ 1,399 3.1 % 2.1 % 2.1 % Intelisys & Advisory 21,477 21,173 304 1.4 % 28.6 % 28.6 % Corporate (1,095) (7,870) 6,775 *nm *nm *nm Operating income $ 66,891 $ 58,413 $ 8,478 14.5 % 2.9 % 2.6 % *nm - percentages are not meaningful Specialty Technology Solutions 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 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. Corporate 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. 35 Table of Contents Total Other (Income) Expense 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 (in thousands) Interest expense $ 1,303 $ 1,836 $ (533) (29.0) % 0.2 % 0.3 % Interest income (2,451) (2,841) 390 (13.7) % (0.3) % (0.4) % 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) % Nine months ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 (in thousands) Interest expense $ 5,163 $ 5,914 $ (751) (12.7) % 0.2 % 0.3 % Interest income (8,994) (8,193) (801) 9.8 % (0.4) % (0.4) % Net foreign exchange losses 1,405 212 1,193 562.7 % 0.1 % 0.0 % Other, net (1,152) (6,418) 5,266 nm* (0.1) % (0.3) % Total other (income) expense, net $ (3,578) $ (8,485) $ 4,907 (57.8) % (0.2) % (0.4) % *nm - percentages are not meaningful Interest expense consists primarily of interest incurred on borrowings, non-utilization fees charged on the revolving credit facility and amortization of debt issuance costs. Interest expense decreased for the quarter and nine months ended March 31, 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. dollar. 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 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 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%. See Note 13 - Income Taxes to the Notes to Consolidated Financial Statements for further discussion. 36 Table of Contents Non-GAAP Financial Information Evaluating Financial Condition and Operating Performance In addition to disclosing results that are determined in accordance with United States generally accepted accounting principles (“US GAAP” or “GAAP”), we also disclose certain non-GAAP financial measures. These measures include non-GAAP operating income; non-GAAP pre-tax income; non-GAAP net income; non-GAAP EPS; adjusted earnings before interest expense, income taxes, depreciation, and amortization (“adjusted EBITDA”); adjusted return on invested capital (“adjusted ROIC”); and constant currency. Constant currency is a measure that excludes the translation exchange impact from changes in foreign currency exchange rates between reporting periods. We use non-GAAP financial measures to better understand and evaluate performance, including comparisons from period to period. These non-GAAP financial measures have limitations as analytical tools, and the non-GAAP financial measures that we report may not be comparable to similarly titled amounts reported by other companies. Analysis of results and outlook on a non-GAAP basis should be considered in addition to, and not in substitution for or as superior to, measurements of financial performance prepared in accordance with US GAAP. Adjusted Return on Invested Capital Adjusted ROIC assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance. We believe the calculation of adjusted ROIC provides useful information to investors and is an additional relevant comparison of our performance during the year. Adjusted EBITDA starts with net income and adds back interest expense, income tax expense, depreciation expense, amortization of intangible assets, share-based compensation expense, and other non-GAAP adjustments. Since adjusted EBITDA excludes some non-cash costs of investing in our business and people, we believe that adjusted EBITDA shows the profitability from our business operations more clearly. We calculate adjusted ROIC as adjusted EBITDA, divided by invested capital. Invested capital is defined as average equity plus average daily funded interest-bearing debt for the period. The following table summarizes annualized adjusted ROIC for the quarters ended March 31, 2026 and 2025, respectively: Quarter ended March 31, 2026 2025 Adjusted return on invested capital ratio, annualized (a) 14.3 % 13.6 % (a) The annualized EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for leap year. There were 90 days in the current and in the prior-year quarter. The components of this calculation and reconciliation to our financial statements are shown on the following schedule: 37 Table of Contents Quarter ended March 31, 2026 2025 (in thousands) Reconciliation of net income to adjusted EBITDA: Net income (GAAP) $ 16,885 $ 17,431 Plus: Interest expense 1,303 1,836 Plus: Income taxes 7,167 6,795 Plus: Depreciation and amortization 5,713 7,492 EBITDA (non-GAAP) 31,068 33,554 Plus: Change in fair value of contingent consideration 440 904 Plus: Share-based compensation 3,955 2,896 Plus: Acquisition costs (a) 142 204 Plus: Cyberattack restoration costs 16 71 Plus: Tax recovery — (1,820) Plus: Insurance recovery, net of payments — (756) Adjusted EBITDA (numerator for adjusted ROIC) (non-GAAP) $ 35,621 $ 35,053 Quarter ended March 31, 2026 2025 (in thousands) Invested capital calculations: Equity – beginning of the quarter $ 910,886 $ 900,662 Equity – end of the quarter 906,261 901,746 Plus: Change in fair value of contingent consideration, net of tax 330 681 Plus: Share-based compensation, net 2,963 2,176 Plus: Acquisition costs (a) 141 204 Plus: Cyberattack restoration costs, net 12 54 Plus: Tax recovery, net — (1,201) Plus: Insurance recovery, net of payments — (570) Average equity 910,297 901,876 Average funded debt (b) 103,210 140,207 Invested capital (denominator for adjusted ROIC) (non-GAAP) (c) $ 1,013,507 $ 1,042,083 (a) Acquisition costs are generally non-deductible for tax purposes. (b) Average funded debt is calculated as the daily average amounts outstanding on our short-term and long-term interest-bearing debt. (c) The annualized adjusted EBITDA amount is divided by days in the quarter times 365 days per year, or 366 days for a leap year. There were 90 days in the current quarter and the prior-year quarter. Net Sales in Constant Currency Excluding Acquisitions We make references to “constant currency,” a non-GAAP performance measure that excludes the foreign exchange rate impact from fluctuations in the average foreign exchange rates between reporting periods. Constant currency is calculated by translating current period results from currencies other than the U.S. dollar into U.S. dollars using the comparable average foreign exchange rates from the prior-year period. We also exclude the impact of acquisitions prior to the first full year of operations from the acquisition date in order to show net sales results on an organic basis. This information is provided to analyze underlying trends without the translation impact of fluctuations in foreign currency rates and the impact of acquisitions. Below we show organic growth by providing a non-GAAP reconciliation of net sales in constant currency excluding acquisitions: 38 Table of Contents Net Sales by Segment: Quarter ended March 31, 2026 2025 $ Change % Change Specialty Technology Solutions: (in thousands) Net sales, reported $ 740,765 $ 678,433 $ 62,332 9.2 % Foreign exchange impact (a) (5,679) — Less: Acquisitions (2,519) — Non-GAAP net sales $ 732,567 $ 678,433 $ 54,134 8.0 % Intelisys & Advisory: Net sales, reported $ 26,025 $ 26,414 $ (389) (1.5) % Consolidated: Net sales, reported $ 766,790 $ 704,847 $ 61,943 8.8 % Foreign exchange impact (a) (5,679) — Less: Acquisitions (2,519) — Non-GAAP net sales $ 758,592 $ 704,847 $ 53,745 7.6 % (a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 2026 into U.S. dollars using the average foreign exchange rates for the quarter ended March 31, 2025. Net Sales by Segment: Nine months ended March 31, 2026 2025 $ Change % Change Specialty Technology Solutions (in thousands) Net sales, reported $ 2,197,752 $ 2,154,009 $ 43,743 2.0 % Foreign exchange impact (a) (11,176) — Less: Acquisitions (11,723) (3,512) Non-GAAP net sales $ 2,174,853 $ 2,150,497 $ 24,356 1.1 % Intelisys & Advisory Net sales, reported $ 75,201 $ 73,915 $ 1,286 1.7 % Less: Acquisitions (1,336) (577) Non-GAAP net sales $ 73,865 $ 73,338 $ 527 0.7 % Consolidated: Net sales, reported $ 2,272,953 $ 2,227,924 $ 45,029 2.0 % Foreign exchange impact (a) (11,176) — Less: Acquisitions (13,059) (4,089) Non-GAAP net sales $ 2,248,718 $ 2,223,835 $ 24,883 1.1 % (a) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2026 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2025. 39 Table of Contents Net Sales by Geography: Quarter ended March 31, 2026 2025 $ Change % Change United States: (in thousands) Net sales, reported (a) $ 710,281 $ 656,964 $ 53,317 8.1 % Less: Acquisitions (2,519) — Non-GAAP net sales $ 707,762 $ 656,964 $ 50,798 7.7 % Brazil: Net sales, reported (b) $ 56,509 $ 47,883 $ 8,626 18.0 % Foreign exchange impact (c) (5,679) — Non-GAAP net sales $ 50,830 $ 47,883 $ 2,947 6.2 % Consolidated: Net sales, reported $ 766,790 $ 704,847 $ 61,943 8.8 % Foreign exchange impact (c) (5,679) — Less: Acquisitions (2,519) — 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% 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. (c) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the quarter ended March 31, 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: (in thousands) Net sales, reported (a) $ 2,099,864 $ 2,056,094 $ 43,770 2.1 % Less: Acquisitions (13,059) (4,089) Non-GAAP net sales 2,086,805 2,052,005 $ 34,800 1.7 % Brazil: Net sales, reported (b) $ 173,089 $ 171,830 $ 1,259 0.7 % Foreign exchange impact (c) (11,176) — Non-GAAP net sales $ 161,913 $ 171,830 $ (9,917) (5.8) % Consolidated: Net sales, reported $ 2,272,953 $ 2,227,924 $ 45,029 2.0 % Foreign exchange impact (b) (11,176) — Less: Acquisitions (13,059) (4,089) 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. (c) Year-over-year net sales growth rate excluding the translation impact of changes in foreign currency exchange rates. Calculated by translating the net sales for the nine months ended March 31, 2026 into U.S. dollars using the average foreign exchange rates for the nine months ended March 31, 2025. 40 Table of Contents Operating Income by Segment: Quarter ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 Specialty Technology Solutions: (in thousands) GAAP operating income $ 15,133 $ 14,294 $ 839 5.9 % 2.0 % 2.1 % Adjustments: Amortization of intangible assets 1,812 2,753 (941) Change in fair value of contingent consideration 410 94 316 Tax recovery, net — (1,820) 1,820 Non-GAAP operating income $ 17,355 $ 15,321 $ 2,034 13.3 % 2.3 % 2.3 % Intelisys & Advisory: GAAP operating income $ 8,145 $ 8,320 $ (175) (2.1) % 31.3 % 31.5 % Adjustments: Amortization of intangible assets 2,189 2,188 1 Change in fair value of contingent consideration 30 810 (780) Non-GAAP operating income $ 10,364 $ 11,318 $ (954) (8.4) % 39.8 % 42.8 % Corporate: GAAP operating loss $ (158) $ (275) $ 117 *nm *nm *nm Adjustments: Acquisition costs 142 204 (62) Cyberattack restoration costs 16 71 (55) Non-GAAP operating income $ — $ — $ — *nm *nm *nm Consolidated: GAAP operating income $ 23,120 $ 22,339 $ 781 3.5 % 3.0 % 3.2 % Adjustments: Amortization of intangible assets 4,001 4,941 (940) Change in fair value of contingent consideration 440 904 (464) Tax recovery (a) — (1,820) 1,820 Acquisition costs 142 204 (62) Cyberattack restoration costs 16 71 (55) Non-GAAP operating income $ 27,719 $ 26,639 $ 1,080 4.1 % 3.6 % 3.8 % (a) Recovery of prior period withholding taxes in Brazil. *nm - percentages are not meaningful 41 Table of Contents Operating Income by Segment: Nine months ended March 31, % of Net Sales March 31, 2026 2025 $ Change % Change 2026 2025 Specialty Technology Solutions: (in thousands) GAAP operating income $ 46,509 $ 45,110 $ 1,399 3.1 % 2.1 % 2.1 % Adjustments: Amortization of intangible assets 6,125 7,769 (1,644) Change in fair value of contingent consideration 1,683 567 1,116 Tax recovery (a) (789) (2,570) 1,781 Non-GAAP operating income $ 53,528 $ 50,876 $ 2,652 5.2 % 2.4 % 2.4 % Intelisys & Advisory: GAAP operating income $ 21,477 $ 21,173 $ 304 1.4 % 28.6 % 28.6 % Adjustments: Amortization of intangible assets 6,565 6,531 34 Change in fair value of contingent consideration 280 1,480 (1,200) Non-GAAP operating income $ 28,322 $ 29,184 $ (862) (3.0) % 37.7 % 39.5 % Corporate: GAAP operating loss $ (1,095) $ (7,870) $ 6,775 *nm *nm *nm Adjustments: Cyberattack restoration costs 99 177 (78) Acquisition costs 996 733 263 Restructuring costs — 5,381 (5,381) Legal settlement — 1,579 (1,579) Non-GAAP operating income $ — $ — $ — *nm *nm *nm Consolidated: GAAP operating income $ 66,891 $ 58,413 $ 8,478 14.5 % 2.9 % 2.6 % Adjustments: Amortization of intangible assets 12,690 14,300 (1,610) Change in fair value of contingent consideration 1,963 2,047 (84) Cyberattack restoration costs 99 177 (78) Tax recovery (a) (789) (2,570) 1,781 Acquisition costs 996 733 263 Restructuring costs — 5,381 (5,381) Legal settlement — 1,579 (1,579) Non-GAAP operating income $ 81,850 $ 80,060 $ 1,790 2.2 % 3.6 % 3.6 % (a) Recovery of prior period withholding taxes in Brazil. *nm - percentages are not meaningful 42 Table of Contents Additional Non-GAAP Metrics To evaluate current period performance on a more consistent basis with prior periods, we disclose non-GAAP SG&A expenses, non-GAAP operating income, non-GAAP pre-tax income, non-GAAP net income and non-GAAP diluted earnings per share. Non-GAAP results exclude amortization of intangible assets related to divestitures, cyberattack restoration costs and other non-GAAP adjustments. These year-over-year metrics include the translation impact of changes in foreign currency exchange rates. These metrics are useful in assessing and understanding our operating performance, especially when comparing results with previous periods or forecasting performance for future periods. Below we provide a non-GAAP reconciliation of the aforementioned metrics adjusted for the costs and charges mentioned above: Quarter ended March 31, 2026 GAAP Measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Insurance recovery Tax recovery Cyberattack restoration costs Non-GAAP measure (in thousands, except per share data) SG&A expenses $ 78,066 $ — $ — $ (142) $ — $ — $ (16) $ 77,908 Operating income 23,120 4,001 440 142 — — 16 27,719 Pre-tax income 24,052 4,001 440 142 — — 16 28,651 Net income 16,885 3,003 330 142 — — 12 20,372 Diluted EPS $ 0.78 $ 0.14 $ 0.02 $ 0.01 $ — $ — $ — $ 0.94 Quarter ended March 31, 2025 GAAP Measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Insurance recovery Tax recovery Cyberattack restoration costs Non-GAAP measure (in thousands, except per share data) SG&A expenses $ 69,698 $ — $ — $ (204) $ — $ 1,820 $ (71) $ 71,243 Operating income 22,339 4,941 904 204 — (1,820) 71 26,639 Pre-tax income 24,226 4,941 904 204 (756) (1,820) 71 27,770 Net income 17,431 3,699 681 204 (570) (1,201) 54 20,298 Diluted EPS $ 0.74 $ 0.16 $ 0.03 $ 0.01 $ (0.02) $ (0.05) $ — $ 0.86 (a) Acquisition costs for the quarters ended March 31, 2026 and 2025 are generally nondeductible for tax purposes. 43 Table of Contents Nine months ended March 31, 2026 GAAP Measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Restructuring costs Tax recovery Cyberattack restoration costs Insurance recovery Legal settlement Non-GAAP measure ​ SG&A expenses $ 231,455 $ — $ — $ (996) $ — $ 789 $ (99) $ — $ — $ 231,149 Operating income 66,891 12,690 1,963 996 — (789) 99 — — 81,850 Pre-tax income 70,469 12,690 1,963 996 — (789) 99 (838) — 84,590 Net income 53,255 9,490 1,474 994 — (2,991) 72 (629) — 61,665 Diluted EPS $ 2.42 $ 0.43 $ 0.07 $ 0.05 $ — $ (0.14) $ — $ (0.03) $ — $ 2.80 Nine months ended March 31, 2025 GAAP Measure Intangible amortization expense Change in fair value of contingent consideration Acquisition costs (a) Restructuring costs Tax recovery Cyberattack restoration costs Insurance recovery Legal settlement Non-GAAP measure ​ SG&A expenses $ 215,324 $ — $ — $ (733) $ — $ 2,570 $ (177) $ — $ (1,579) $ 215,405 Operating income 58,413 14,300 2,047 733 5,381 (2,570) 177 — 1,579 80,060 Pre-tax income 66,898 14,300 2,047 733 5,381 (2,570) 177 (5,624) 1,579 82,921 Net income 51,458 10,709 1,542 733 4,054 (3,761) 133 (4,237) 1,189 61,820 Diluted EPS $ 2.13 $ 0.44 $ 0.06 $ 0.03 $ 0.17 $ (0.16) $ 0.01 $ (0.18) $ 0.05 $ 2.56 (a) Acquisition costs for the nine months ended March 31, 2026 and 2025 are generally nondeductible for tax purposes. 44 Table of Contents Liquidity and Capital Resources Our primary sources of liquidity are cash flows from operations and borrowings under our $400 million revolving credit facility. Our business requires significant investment in working capital, particularly accounts receivable and inventory, partially financed through our accounts payable to vendors, cash generated from operations and revolving lines of credit. In general, as our sales volume increases, our net investment in working capital increases, which typically results in decreased cash flow from operating activities. 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 $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. We provide for United States income taxes from the earnings of our Canadian and Brazilian subsidiaries. See Note 13 - Income Taxes in the Notes to the Consolidated Financial Statements for further discussion. Our net investment in working capital, defined as accounts receivable plus inventories less accounts payable, decreased $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. Nine months ended March 31, 2026 2025 (in thousands) Cash provided by (used in): Operating activities $ 125,403 $ 104,704 Investing activities (24,989) (59,873) Financing activities (107,027) (83,424) 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 $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 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. 45 Table of Contents Credit Facility On December 18, 2025, the Company entered into a credit agreement (the “New Credit Agreement”) with PNC Bank, National Association, as administrative agent (“PNC”), and the other lenders party thereto (the “Lenders”), providing for (i) a five-year, $400 million multicurrency senior secured revolving credit facility and (ii) a five-year $100 million senior secured term loan facility (the “New Credit Facilities”). In addition, pursuant to an “accordion feature,” the Company may increase its borrowings by up to the greater of $250 million or 150% of the Company’s EBITDA calculated on a Pro Forma Basis (each as defined in the New Credit Agreement), subject to obtaining additional credit commitments from the Lenders participating in the increase. The New Credit Agreement allows for issuance of up to $50 million for letters of credit. Borrowings under the New Credit Agreement are secured by substantially all of the assets of the Company and its domestic subsidiaries. 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 New 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 Term Secured Overnight Financing Rate ("SOFR") or 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 its 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 base rate plus an additional margin ranging from 0% to 0.75%, depending upon the Company’s leverage ratio. All swingline loans denominated in U.S. dollars bear interest based upon the daily simple SOFR, floating daily, 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. Loans denominated in foreign currencies bear interest at a rate per annum equal to the applicable benchmark rate set forth in the New Credit Agreement plus an additional margin ranging from 1.00% to 1.75%, depending upon the Company’s leverage ratio. A commitment fee is payable on the unused amount of commitments under the revolving credit facility. The commitment fee ranges from 0.15% to 0.30%, depending on the Company’s leverage ratio. 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 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 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. Specifically, the Company’s leverage ratio must be less than or equal to 3.50 to 1.00. In addition, the Company’s Interest Coverage Ratio (as such term is defined in the New 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 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. Summary 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. 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. 46 Table of Contents Accounting Standards Recently Issued See Note 1 of the Notes to Condensed Consolidated Financial Statements for a full description of recent accounting pronouncements, including the anticipated dates of adoption and the effects on our consolidated financial position and results of operations. Critical Accounting Policies and Estimates Critical accounting policies are those that are important to our financial condition and require management's most difficult, subjective or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. See Management's Discussion and Analysis of Financial Condition and Results from Operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 for a complete discussion. 47 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk For a description of our market risks, see Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025. No material changes have occurred to our market risks since June 30, 2025. 48 Table of Contents