SCSC - Earnings call transcript Q2 2025

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Operator

Welcome to the ScanSource quarterly earnings conference call. [Operator Instructions]. Today's call is being recorded. [Operator Instructions]. I would now like to turn the call over to Mary Gentry, Senior Vice President, Finance and Treasurer. begin. may you Madam,

Mary Gentry

thank joining and you morning, us. for Good

remarks Baur, Jones, our call Financial will and Mike prepared include Steve Our Chair from CEO; Officer. Chief and

for take We quarter accompanies section our in an operating of our webcast will that results and Investor review earnings infographic and questions. your the then comments We our posted results the Relations website.

forward-looking cause and statements infographic materially These and earnings results call identified XX-K XXXX. are year our As uncertainties differ release, on risks for in in to could press you ended June statements in know, from subject our risks actual include certain to and our that and the the and this expectations. release uncertainties factors

disclaims required update statements, Forward-looking only our law. statements by represent views duty ScanSource except these any as as and today to of

During I'll discuss our non-GAAP our have provided GAAP and turn on Mike. results now Form to the and and in call, our over website will reconciliations X-K. both we call

Mike Baur

everyone, instead, Thanks, QX. After The expected growth, remained X%. not QX, in challenge for but longer growth soft a quarter and QX declined And large that Mary. sequential we sequential lasting is joining happen. we our quarter than Thanks, net for environment sales deals demand today. expected did us

However, gross growth environment, profit in a we strong soft profit and margin. a demand delivered gross

hardware, We are for cloud. with connectivity SaaS, executing models our hybrid sales and distribution strategy, choice providing flexibility multiple and

enable software, requirements. more them Our channel services sell and customers' the partners including trust meet end to offerings broaden us the technology to technology to of their stack, devices,

our technologies acquisitions, Resourcive, for value result AI. and understanding next-gen build acquired of revenue advisory increased We CX more customer recurring the partners of channel successful in we the cybersecurity future partners. offerings recurring will end needs. of by to like includes and drive have to This the that model our we opportunity recent channel business channel expanded our business. With to stream In profitable addition, a sustainable more a give revenue our opportunities build

and to serve at enable plan technology quarter of opportunity efficiently connectivity our our a the our and of are a value more way with to managed about revenue by mobile needs for that a more a many have a Advantix, opportunity and a channel solution, to partners. This barcode full add recurring channel a will tools revenue After recurring VARs revenue. high solution market. represents Advantix combining to reception also MCX develop example and recurring of we The the mobility hybrid excited this provider, devices of first margin We great is operations of the customers. devices resources partners our Intelisys experience in end add-on

Advantix drive hybrid the new as hardware opportunities. a by opening see solution also demand up way We to

over through Looking fiscal turn year I'll call you ahead, we financial well for returns. the demand Steve profitable results take XXXX. now our and our to when are growth positioned to outlook for

Stephen Jones

Mike. Thanks,

the QX, business continued For to demand. experience

led XX% line While our our consolidated QX of expectations, margins below revenue, recurring our gross top for which saw gross higher by profit mix strong represents we of profit. was

EBITDA adjusted margin. profitable translated higher mix more a Our into

consolidated XX.X% declined QX, our For net sales year-over-year.

X%. However, adjusted EBITDA only declined our

delivered a performance remain year X%, decreased business flat This flat essentially the of while was in headwinds decline includes rebates. revenue new This profit double-digit our Technology profitability quarter align EBITDA reporting believe higher strong is margins vendor year-over-year, occurring of first reflecting non-GAAP Non-GAAP strategy. supports range. XX% better for current with second sales and that full concentration These EPS for our the the year-over-year revenue. In strong models For we and guidance a our distribution cash net financial annual our sales business free margins net on large the our flow segments. of deals as Specialty half FX segment, segments quarter, and gross quarter-over-quarter. and under year-over-year. We reminder, our and Brazil X.X%. our X% income use XX.X% and segments was different a recurring declined executing business. Gross delivering diluted hybrid Solutions in improved adjusted both And profit focused

this For margin of from to was increased recurring adjusted percent the and XX.X% segment, Segment to XX%. X.X%. gross gross approximately revenue margin profit profit increased EBITDA

do the our Advisory recurring barcode XX% sales reflects in While our a we've mobility, growth mobile including with addition net X% increased including Resourcive profits profit physical seen concentration technologies this MCX. In gross in of not and security the broad-based in of have year-over-year and Intelisys of recovery & portfolio, segment this and revenue. year-over-year we segment, X% Gross margin higher segment the acquisition. connectivity,

SG&A margin solutions. QX double-digit year-over-year EBITDA growth our continued growth. approximately net CX X% billings and adjusted year-over-year drive bring to end investment the including for $X.XX of XX.X% CX Intelisys annualized billings CCaaS reflects to to includes billion, billing UCaaS, AI-enabled increased which user Our in

double-digit business. saw also for our SaaS growth We

our a advisers channel we replacing trusted [ $XX million generated flow. we more ENT channel customers. Year-to-date, During With to deliver ] have now end the exchange way solutions SaaS announced to a cash new quarter, for Intelisys Cascade we platform, [ platform. our in exchange], free SaaS

late payments. and quarter, $X cash for we quarter million However, vendor timing the of sales flow used for to free due both

as a remains our cash annual in flow metric building we're it focused compensation a said, and cash team key culture on our generating is variable free we've As plans.

and bit to X our of contribution levels $XXX on with of to our quarter leverage EBITDA strong basis. ratio acquisitions XX-month to plans a trailing our we our supporting working X deeper Xx QX. while continue while balance balance and share channel modest demonstrates quarter adjusted million repurchases ended leverage a We Mike adjusted appropriate inventory we're million net execute Share meet from balance X.Xx acquisitions allocation maintaining the our plans. Adjusted includes flow, with repurchases plan ROIC maintaining to totaled for is XX.X% to a acquisitions. QX partner and trade and with our offerings. capital again in and cash Going full pleased performance sheet cash debt with they a strategic improve sheet credit of what and our and on efficiency demand capabilities channel for to capital EBITDA. ourselves debt net our a $XX said, bring the And as our QX

continue to have these an targets, We evaluating discipline active acquisition we'll maintain pipeline our of in and opportunities.

tech For demand of environment. still believe on 'XX, the a are remainder we improve FY spending will but cautious

flow We questions. billion, between are million. ranging our million up between billion annual and $XXX We'll cash $X.X now of at least ranging for and adjusted net reconfirming $XX sales free it $X.X million of open and EBITDA $XXX guidance

Operator

Instructions]. [Operator

of from Sidoti. of Burns question Greg comes the first Our line

Gregory Burns

about detail. Just environment talk the demand bit maybe little wanted current a to in more

throughout can this quarter? where as -- Did expected Did far quarter it As worsen the of it guidance ended improve? in and you quarter? when did where How progressed, it last terms sequential they cadence how out just you quarter maybe maybe the gave progressed? about the play talk the up quarter you you

Mike Baur

for end December. focused our Yes, to as a about on [indiscernible] exception don't progresses suppliers business, And the how because if of Mike. normally have normally they during very year about December we business try it's the careful how talk be ends. by most a quarter are Greg, result, closing typically one with out I'll some calendar maybe But of our you quarter. think

month that that of So quarter the in is weighted heavily typically, December quarter. very

significant the but December. other to different So some by it's of the the where we not our significantly to of quarters, than means which it's large have really expected deals enough end quarter, end

year-over-year have we guidance we And we our gave to would the was and deals large that double-digit earlier, so decline a a thought surprise. increase in as typical have

really business, clear. deal-driven you And just that so the we're this miss, we so our a hardware was for believe large expectations will, specialty for -- business if on

Gregory Burns

the half the gets guidance midpoint thinking anything gives And seeing towards end full miss in bit quarter. year Or you your -- despite you are Okay. back are of and or the Is still guidance EBITDA anything that you the spot think channel more a that revenue you then low little you good this confidence about? Are maintain to a now? stronger? the hearing

Stephen Jones

Greg, that's for We we're of We have thinking Steve, believe we to still business. our the be about and still in the thanks where Well, a chance kind range. there's think I is the that that's this down the be and question. growth. that said into came half, half and the actually opportunity we what second half year, have when would would we believe growth the first in second thought And we

we Our every ship line the problem know of is day. our most line, which with our hardware, you comes top top from

we we're don't with work orders, taking backlog. So

have visibility top the So environment. on helps predictable. that But is that our We hard revenue line GP that and recurring really tough visibility line. our more the do to us in help us is for GP become the have on. streams

Operator

Instructions]. [Operator

next Our line Northcoast of comes Housum from question of Keith the Research.

Keith Housum

it saw current don't quarter usually guys here, presidential seeing anticipating How are the of that quarter November. but that extraordinary you there the you we know think time for following in is that was kind any starting a seems. you off guys? Are I I recovery? signs I this was about talk an elections we

Mike Baur

Well, not that's We that don't we're today. to appropriate. We're Keith, think in on going this is Mike. report quarter the

previously based sending guidance about the half. that to this the attainable about given. do second business feel half -- how And our think our we've still teams message we're morning second real I is the the talked they we've for on

reconfirming teams the spent And we've lot achievable. that still given time our guidance with so a is we of

grow we Steve know, backlog, between be more to as don't and reaffirm, It's but as that versus Steve always we're so right the business not X. And to as again, few second to for have a will we're ago, only half said trying a challenging discern we now because And certain have now was the challenge. May sitting start going a confidence you said, little us we believe Keith. to where minutes

many which talk as -- is, in get do, like year. this. and their is always challenge for And I would partners know there's say optimism year sense the us, of of what to off I go the you your you of I senses. last cautious coming to say channel, again, into So this would a do is a

channel think will of this I better. that partners our believe all year be

hit we're guidance. basing on the we We end. make it of feel at expectations sentiment that's this than us comfortable And in thinking are is It's about our already, more higher this our revenue sentiment could okay? very certainty lower that versus the on end more any so come And with on on what stage. on

Keith Housum

the helpful. you was didn't of know there better. they Okay. you broad a a that it. that basis, Or across broad-based doing your guys a appreciate in were challenges others? saw you I That's few the quarter, few worse than of that technologies technologies that pretty the we're most sell? And on guys But was

Mike Baur

and And to and so is going [indiscernible]. you weren't as about very and about was especially talked that, on. Well, we mind across the And of talk clearly, I already the rest knocking of a We've Keith, through, that. quarter saying you with because decided the didn't last physical green that, is we [ my saying came up guys we of business, about good. By and story. the shoots obviously, going great what some good And the security ] changed the feel where though we the Mobility know, Barco areas, quarter, about end where needed have heck the -- that. by other are so-called results technologies that I indication the

earlier, of some what And we during have any expect attain our outside getting next of the you however, was back quarters. X we of to detail a technologies to we the we other come life there And one have challenge didn't will to that about any expect. without them, so about in that those guidance, get talked quarter annual once

do And have so that. we expectations for

Stephen Jones

pockets talked Keith, there about deals overall, deals us. saw story about that that might large across we large and the his the came really some the add, I are of of Mike that deals in board through, the large but comments surprised were what

Keith Housum

volume a guys price last like any any is me. you have acquisitions, I competitive that say. out as acquisition changes to there that, strategy acquisition strategy price Intelisys you versus more I dynamics question That's is for and revenue The the And looks actually after Okay. how business, It I helpful. have business assume that versus that dropped this pursuing and your called should of or volume, current guess, I that your am excluding becoming few got And to right year-over-year? guys quarters? in are you tweaks you I guess, guess

Mike Baur

competitive So pressures things essentially of a Intelisys sure. couple still what comments. a And flat out was we've for business year-over-year. there's there couple is seen of

talked a the that the And we be we've one, what that Channel new things called the really There in we've Keith, come we technologies to a created done what probably ntiCascade about could is, we years, challenges channel. about As ] X fresh used we not X last platform, are to we're way exchange ] look doing learned is were that who's [ call talk got new in calling President, what already some even one, I'll a and we the suppliers that or on X a attract for Intelisys mentioned things new X.X the [ are of Intelisys. some you maybe recruit now. landscape? And as suppliers we months taking in of know, day to provide the the to last past to their competitive [ is one at, in Ken Mills], years and a Intelisys hey, facing have that

this become us is of have for suppliers the to this don't And our Intelisys competitors partners a what us platform the community offers required have. so channel that to now distributor. some for And allows channel

of [ like exchange]. tool channel competitors our product other none have So and a a TSD

treating our some So make ] us are business way partner new [ lot sure we're partners. very two, in have a that's has together given tail the partners a number from we're segmentation make loyal sure over strategy different they put one. who them years, maybe number the to long, partners treating Ken of a long of that's that And that

aligning we're commission value-added then we're possible best we doing make is and what a sure services, we need if segmentation, give doesn't proposition that value And appropriately. partner partner means our that more all So split. them that have the the we'll

alignment this partner think in. I offers the our specific is So of is bringing Ken to something

before it's all said believe on competitive this, long-term we quarters the a to it's this, to the results a going having right build the but standpoint. few strategy back of Now see take growth we Intelisys

Keith Housum

still some between the strategy Intelisys in the with grow is and agents And these on help to Okay. of wall and acquiring to this business business keep Chinese those?

Mike Baur

on we that So hand. said has that our really resources the competitive of market -- started, how market that's we believe We our side, forced the course.

thing. All of our competitive were distributors same doing the

That's really and acquire of model up we yes, this one and our plan about by be to buying agents. interest. not create It So complementary doesn't just be buying our might up be assets. is to now We careful some right started rolling want we revenues. future have it channel and to that rolling the just

as other a So roll is really, to EBITDA is we educate be to can that the we're channel not to to we successful and Intelisys create then model partner. teach up more use looking believe and it going

will more do it's just this would users we really not say end of create gravitate model start to channel unique we a I up. how will roll that believe be So It's us. and more to the successful

organically I can fairly grow it significantly. also think

Operator

from question Burns a do of have We follow-up Instructions]. Greg [Operator Sidoti.

Gregory Burns

up little bit on to I follow just Intelisys. wanted a

you maybe the either declining of have of how a mentioned areas double-digit imply expect minimis might business? there, improving where that seen of that, And where terms getting you're do piece point mix that a you natural business impact would to there of still? and growth the where there, are that guess, the areas see moderate? of big the Or you they de declines are some growth seeing you've with to business a in of lift kind are they that I portions in the declining that In just

Mike Baur

Yes, this. Greg, think more like I it's

seeing of What get they them contracts get they're is the technologies. declining newer renewed but these that are some are necessarily not technologies older renewed, So with we're as not either. growing,

too. those older years for focus ones]. still [ principally. those channel a they about on from high And still fulfill with happen many, that the about on And the circuits lower-cost technology, does older a suppliers contracts effect teams will one and going we're direct large. And suppliers what they're looking suppliers, can they're talked technologies, be use the to direct example, that some like many on talking to side are, to shift even to believe And while guess we some of come. And still be still sometimes the a basis, technologies, just ways their of advanced I'll in or network want dynamics offers as to principally the want we there's the are the sold by businesses the so shift, technology believe but them. we of actually it's still businesses that those in for an They focus even compensated sales very technology, and older new haven't still just in that don't to be

we growth older doesn't can rates don't So be technologies have won't called that these no, in out, clear. have believe double-digit growth life, older we but like they we technologies, to rates long just still a single-digit mean those have

Operator

Thank back Sir? you. closing would remarks. Jones now to for Steve to the turn conference I like

Stephen Jones

Thank for you, you and us. Yes. thank joining

conference We approximately our May XX next X XX:XX a.m. expect to hold quarterly Thursday, to on results discuss at call March

Operator

this concludes conference And Thank today's call. participating. you

may You disconnect. now

ScanSource (SCSC) 30 Jan 252025 Q2 Earnings call transcript