ScanSource (SCSC) investor relations material

Executive summary

• Q1 FY27 net sales rose 30.1% YoY to $962.3M, with growth in both segments; lower-margin sales mix and higher Brazil bad-debt expense pressured profitability.

• FY27 net sales and adjusted EBITDA outlook increased, incorporating MicroAge; management views Q1 margin pressures as largely contained to the quarter.

Financial highlights

• Gross profit rose 8.8% YoY to $116.9M, while consolidated gross margin fell to 12.2% from 14.5%.

• GAAP operating income fell 52.2% to $12.4M; net income declined to $8.7M from $19.9M and diluted EPS to $0.42 from $0.89.

• Adjusted net income was $17.7M and adjusted diluted EPS was $0.86, versus $23.7M and $1.06 a year earlier; adjusted EBITDA fell to $31.3M from $38.6M.

• Non-GAAP SG&A, including acquisition costs, was $92M, or 9.6% of sales, versus $75M, or 10.1%, a year earlier.

Outlook and guidance

• FY27 reported net sales guidance, including MicroAge, is $3.8B–$4.0B; adjusted EBITDA guidance is $175M–$185M.

• FY27 free cash flow expectation remains at least $85M, with positive full-year free cash flow expected.

• FY27 interest expense is expected at $18M–$20M and the effective tax rate at 27.5%–28.5%; Q2–Q4 guidance confidence maintained.

• FY27 capital expenditures are expected at $8M–$12M, primarily for IT and warehouse investments.